On Friday, Salt Lake County's mental health system embarked on a major overhaul.
After winning a competitive bid, OptumHealth took over administration of the county's $50 million mental health programs for the next three years from longtime manager Valley Mental Health. It promises the county's 16,000 patients more options for care, a new crisis response system to reduce hospitalizations and a stronger emphasis on helping patients recover.
But the Minnesota-based company faces skepticism from providers, patients and their allies, who fear the already-stressed system could get worse under a for-profit model. OptumHealth is a subsidiary of UnitedHealth Group, which also includes health insurance giant UnitedHealthcare.
Salt Lake County promises to closely monitor the company it hired to oversee its Medicaid and other programs to ensure OptumHealth delivers on its promises. Still, the county acknowledges that patients will face changes which Valley Mental Health officials predict will include less time with their doctors and therapists.
"We have a contract in place to make sure they are being good stewards of these dollars," Tim Whalen, director of the county's behavioral health system, told a packed room of providers and clients earlier last week at an open house about the shift.
The people at the open house showed their suspicion of the change with questions such as: How will a for-profit company focus on mental illness and not profits? Why does adding another layer of administration cut costs?
"There's fear," Whalen acknowledged. "There's angst in the community."
Under contract •While in the past, Medicaid money flowed from the state to Valley, it will now flow from the state to the county to Optum. With that change, plus requirements in its 100-plus page contract with Optum, the county has more control than it had with the nonprofit Valley. Some of the requirements are meant to avoid the frustrations the county had with Valley's overseeing its own work.
• Leftover Medicaid funds Optum will be prepaid based on the number of people eligible will be reinvested in mental health by the County Council. In the past, Valley controlled the extra dollars.
• The county will meet weekly with Optum and require frequent reporting, giving it more say over how the programs are run. That collaboration has already led to Optum convincing Medicaid to pay for peer-support services. The model allows former mental health patients to help current patients navigate the system and move toward recovery.
"The way we help consumers or clients is by sharing our recovery story," said Julie Hardle, Optum's Recovery and Resiliency manager and a certified peer specialist. "There's a lot of studies that show that interaction with peers is extremely valuable."
• The contract gives Optum incentives to improve crisis response, which Whalen said was essentially limited to law enforcement under Valley.
To address fears that Optum is in the business just to make money, the company's Salt Lake County executive director points to the county-imposed 2.5 percent cap on profits. That could equal $1.25 million this year.
Optum's overall slice up to 13 percent (see breakout box) is less than what Valley took in fiscal year 2011, according to the county.
"OptumHealth is very committed to ensuring that we deliver the most appropriate care at the right time at the right place," Richard Elorreaga said. "We have a profit margin cap, so our decision-making is not financially driven."
Changes in care •Optum and county officials insist that the services provided by Valley will continue under Optum, though some will be provided by new contractors.
But Valley executive director Debra Falvo predicts the care will not look the same.
Valley has laid off 100 employees in order to become an Optum contractor. Based on Optum's treatment protocols, Falvo anticipates the frequency of visits approved for patients will drop 15 percent to 20 percent.
"I don't want anybody to believe that it's going to look the same," she said. "It's very, very different."
Disputing the prediction, Elorreaga said the company would determine the "most appropriate level of care" for patients.
Optum has already increased the number of providers agreeing to treat its Medicaid patients by 142, bringing its network to about 480.
For example, instead of just one option to hospitalize Medicaid patients University Neuropsychiatric Unit (UNI) there will be three: UNI, Pioneer Valley Hospital in West Valley City and Salt Lake Behavioral Health, a psychiatric hospital in Salt Lake City.
Such expansion makes Matt Vicario optimistic. The therapist, whose employer, CLD3 Counseling, is set to become a new provider with Optum, said patients should see more services, reversing the impact of Valley's recent cutbacks.
That should reduce the impact on hospitals and the jail where the population of seriously and persistently mentally ill is 3 percent.
"With a decrease in services, people are less motivated to try," Vicario said.
Concerns about claims •Some care providers in New Mexico, where Optum has run the state's mental health and substance abuse funds since 2009, draw a bleaker picture.
According to coverage by The New Mexico Independent and the Santa Fe New Mexican, the $1.3 billion, four-year contract was soon in jeopardy when Optum failed to pay providers for their work. The company blamed its electronic claims management system. It paid $1 million to help providers recover from the delayed payments and to hire a monitor to oversee its work.
Earlier this year, new complaints surfaced that Optum was ignoring a district court judge's treatment orders, questioning child psychiatrists' recommendations and implementing new rules that led to more denials of payments to providers.
Optum flagged $1.6 million in claims for automatic review over three months. While the company said it was to root out waste and abuse, the state ruled the company would have to pay $1 million of the claims and work with an independent panel to review the rest.
Providers believed Optum was trying to reduce costs to retain a profit, which the company said it would forgo this year.
Roque Garcia, CEO of two behavioral health companies in Las Cruces, says it costs his companies 35 cents to try to collect each dollar provided in care. That's led to layoffs to cover administrative costs.
"You can't provide as many services because you're running so inefficiently," he said. "It's been devastating to our system, the entire mental health system."
Elorreaga says Optum in Salt Lake County will use a different payment system and will be training providers on how to submit claims to "ensure timely payment."
A new approach to crisis •Pierce County, Wash., has become the model for what Salt Lake County officials want.
Optum took over management of a similarly sized Medicaid mental health program in the Tacoma area in 2009 and redesigned its crisis response system. In creating an alternative to the emergency room, Optum built a crisis triage center that is meant to feel more like a living room with comfy sofas and artwork than a hospital, though patients can stay for up to five days. According to Optum data, nearly half of the patients in a five-month period were referred home. Just 3 percent received inpatient psychiatric care. Reducing hospitalizations saved $1.5 million last year.
"It feels like a place where you go to rest and recover," said Troy Christensen, Pierce County's mental health manager before Optum took over.
He counts the new crisis system, along with Optum's peer support program, as a huge success because it has shifted from focusing on illness to recovery. "They have far exceeded what we were able to do as a system," he said.
In Salt Lake County, Optum will get $200,000 after it builds a mobile outreach crisis team and a triage center.
It will get another $100,000 to reduce the length of hospital stays, from what Salt Lake County says is an average of 14 days to under 10. Hospitalizations cost the county nearly $9 million last year.
Doctors and families watching •To meet that goal, observers say Optum will also need to improve care for patients before and after they hit a crisis.
"It's their responsibility to create outpatient step-down programs," said UNI executive director Ross Van Vranken. "It has to do with the resources they put into getting these people out of here [UNI]."
Brian Oliver, an emergency room doctor who leads the Utah Chapter of American College of Emergency Physicians, said it now takes two to three weeks to get follow-up appointments with therapists and psychiatrists after patients are admitted for violent behavior. A strapped system, he worries, doesn't have room for a for-profit company to make money.
"My fear is that [the need for a profit] is going to slow things down and drive some of the patients who need hospitalization out of the hospital too soon," he said. "That's highly speculative, but that's my concern."
The county contends Optum has every incentive to expand access, not restrict it: Future Medicaid dollars and thus Optum's cut depends on adding more patients. The contract also provides incentives for timely access to care and timely payments to providers.
Clarine Penrose, for one, will be watching to make sure care doesn't suffer. Her son lives in an apartment overseen by Valley Mental Health. The Taylorsville woman relies on those providers to keep her son safe.
"I hope they [the county] will be watching this carefully," she said. "I will be one of those citizens who will be asking to see the books."
Follow the money
OptumHealth will administer $50 million a year $47 million in Medicaid funds and $3 million for other Salt Lake County priorities, including caring for the uninsured, at-risk youth and senior citizens, as well as providing jail diversion programs. The amount represents a $4 million cut from fiscal year 2011 due to federal and state cuts.
The county contract lays out how much money Optum will receive:
• 9.5 percent, or $4.75 million, for administration.
• 2.5 percent, or $1.25 million, in profit. If costs end up higher than the available funds, Optum will have to cover the risk. Any additional savings will be controlled by the county to reinvest in mental health.
• 1 percent, or $500,000, in incentives, which include decreasing inpatient stays, timely access to care and timely payments to providers.
That potential $6.5 million slice is less than the $8.4 million Valley kept for administration and managed-care costs, according to the county.
Who is OptumHealth?
A UnitedHealth Group (NYSE: UNH) company, OptumHealth Inc. is one the nation's largest health and wellness businesses.
It manages mental health and substance abuse programs, along with chronic or complex medical conditions, for 5 million Medicaid and Medicare patients in 38 states.
Salt Lake County is the fourth government entity to contract with Optum to manage mental health-only contracts. The others are Pierce County, Wash.; San Diego County, Calif.; and New Mexico.
UnitedHealth Group posted $25.4 billion in revenue in the first quarter of 2011, with net earnings of $1.35 billion.
Transitions in care
Crisis services • Valley Mental Health will continue to run the 24-hour crisis line, 801-261-1442, for 90 days. Then, University Neuropsychiatric Institute will take over. UNI has also won the contract to create a mobile crisis response unit.
Representative Payee • Guardian and Conservator Services will manage Social Security checks for clients who have been clinically and legally declared unable to manage their own money. While the Social Security Administration allows such companies to charge $37 a month, Medicaid patients will not pay that fee. At most, they will pay $9 a month.