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Ann Marie T. Sullivan, M.D., Acting Commissioner
Governor Andrew M. Cuomo

Clinic Restructuring
Implementation Plan

March 11, 2009

Table of Contents

Transforming New York’s Mental Health System: A Summary

New York’s outpatient mental health system needs to change. It is too fragmented, overly reliant on inpatient care, and it continues to face an uncertain Federal Medicaid environment. Further, New York’s own Medicaid reimbursement rules for publicly funded mental health services are overly complex. They lack appropriate incentives for rapid access, early intervention, and best practices to support recovery in adults and resiliency in children.

The New York State Office of Mental Health (OMH) has undertaken a multi-year initiative to restructure the way the State delivers and reimburses publicly supported mental health services. The goal is to develop a system of quality care that responds to the individual needs of adults and children and delivers care in appropriate settings.

Clinic restructuring represents the first phase of this transformation process. Parallel initiatives are tackling the many challenges facing support services for children, rehabilitation and support services for adults, inpatient services, and the treatment of co-occurring disorders in both mental health and substance abuse clinics.

All of these efforts include significant stakeholder participation and input. Clinic restructuring is being done with the extensive involvement of an Advisory Workgroup (Workgroup) consisting of a broadly representative range of local government officials, mental health providers, and mental health advocates (Mental Health Clinic Restructuring Workgroup). OMH charged the Workgroup with advising the agency on ways to:

  • Create a mental health system that is focused on recovery for adults and resiliency for children;
  • Redefine clinic treatment services; and
  • Restructure the financing of the mental health clinic treatment system.

This plan, developed by the New York State Office of Mental Health (OMH), reflects the advice and substantial efforts of the Workgroup. It describes a redesigned clinic program; a new payment system; and a multi-year implementation plan.

Key Elements of Clinic Restructuring

This plan contains six key elements for reform:

  1. A redefined and more responsive set of clinic treatment services and greater accountability for outcomes.  Clinic is defined as a level of care with specific services.  These services should enhance consumer engagement and support quality assessment and treatment.  Clinic treatment should be part of a coordinated and accountable system of recovery and resiliency, which includes other Medicaid reimbursable and non-Medicaid specialty services, such as case management, day and vocational services.

  2. Redesigned Medicaid clinic rates and phase out of COPS1.  Medicaid payment rates will be based on the efficient and economical provision of services to Medicaid clients.  OMH will establish peer groups for payment.  Payments will be comparable for similar services delivered by similar providers across service systems.  Payments will also include adjustments for factors which influence the cost of providing services.  The new system will eliminate rate add-ons such as COPS.

    OMH is committed to integrating clinic restructuring with the NYS Department of Health’s (DOH) new outpatient reimbursement methodology called APGs (Ambulatory Patient Groups).  APGs will replace New York’s current "threshold visit" methodology for reimbursement.

  3. HIPAA compliant procedure based payment systems with modifiers to reflect variations in cost.  The Federal HIPAA Administrative Simplification Act requires the use of a HIPAA compliant billing system. Billing codes for clinic services will be HIPAA compliant with modifiers to reflect differences in resources and related costs (e.g, service location, night and weekend hours, language other than English).

  4. Provisions for indigent care.  Article XVII of New York’s Constitution gives the State a special responsibility to care for "persons suffering from mental disorder or defect and [for] the protection of the mental health of the inhabitants".  Assuring access to outpatient clinic services is essential to meeting this objective and reducing the demand for other high cost services such as inpatient care.  Currently, OMH clinics receiving COPS are required to serve all clients regardless of ability to pay.  As part of restructuring, OMH will work to develop a comprehensive strategy for funding mental health outpatient services to the uninsured.

  5. Address Medicaid HMOs/State insurance plan underpayments.  Medicaid managed care, Family Health Plus and Child Health Plus plans underpay for mental health clinic services.  The average managed care payment for clinic services (without COPS) is approximately one-third to one-half of actual cost.  This is significant because Medicaid managed care alone (not including CHP) represents 12% of clinic visits.  This percentage is expected to grow as the state expands mandatory managed care enrollment.

    To ensure continued access to clinic services, OMH needs to address Medicaid managed care underpayments.  Additionally, OMH and DOH need to monitor managed care plans to ensure appropriate member access to mental health services.

  6. Standards of Care.  OMH recently released standards of care for clinic treatment for adults and children.2  These guidelines are a first step in articulating the basic tenets of good clinical care and accountability. While these have been longstanding expectations, they have not been consistently communicated or met. These fundamentals of care should be occurring in all clinics now as well as in our redesigned clinic of the future.

Why Restructure Outpatient Services?

Over the past 50 years, New York’s public mental health system evolved from one dominated by large State psychiatric hospitals serving tens of thousands to a highly dispersed system of non-profit organizations, county mental hygiene departments, and state and private hospitals. There are now more than 2,500 mental health programs in New York State. These programs provide Medicaid and non-Medicaid funded mental health outpatient, emergency, residential, community support, vocational and inpatient care services to 688,000 individuals annually.

As this change was occurring, New York, like many states, expanded Medicaid funded mental health services.  Today, Medicaid pays approximately 50 percent of the more than $5 billion annual cost of public mental health services.  However, the distribution of funding for this system has not adjusted to reflect changes in our service delivery system.  As a result we have a system where:

  1. Outpatient services (Medicaid and non-Medicaid funded) are under funded.  Services have been prevented from expanding by the State’s mental health Medicaid neutrality policy (recently repealed);
  2. Approximately half of the public mental health dollars finance mental health hospitalization;
  3. Reimbursement for clinic services is complex and inequitable.  "Short term" Medicaid initiatives like COPS3 have become permanent solutions;
  4. Insufficient resources are devoted to early identification and treatment.  Research shows that the onset of serious mental illness occurs in early adolescence, yet identification and treatment are often delayed for years. Effective access to early identification and clinic treatment can help address this issue;
  5. In some areas of the State, there is insufficient access to specialized services (e,g., case management, vocational services, children’s waiver) that assist individuals in meeting life roles;
  6. The financing system does not incentivize recovery/resiliency, success in school and/or employment, and other desirable outcomes;
  7. Many consumers experience a system plagued by fragmentation, poor communication, poor coordination, and a lack of accountability. 
  8. There is poor integration between mental health/substance abuse/physical health care.  As a result, individuals with emotional disturbance/mental illness often have unaddressed debilitating health conditions (e.g., obesity, diabetes);
  9. There is insufficient data to demonstrate the effectiveness of service outcomes; and
  10. Other systems serving children and adults (i.e., schools, criminal/juvenile justice, social services and emergency rooms) experience the effects of uncoordinated and/or limited access to mental health care.

Additionally, numerous proposed federal regulations and continuous Federal reinterpretation of previously approved state financing practices, such as COPS and the CSP add-on, puts the State, counties and providers at substantial financial risk.

A Recovery Vision for Clinic Restructuring

A fundamental vision for mental health treatment systems is "resiliency and recovery" as articulated by the New Freedom Commission.  Building on the historic focus of clinics solely on symptom reduction, this vision shifts to a focus on symptom reduction with a meaningful life in the community. 

Clinic treatment has been the foundation of the public mental health system for over thirty years.  Following deinstitutionalization, mental health clinics became a primary treatment resource and safety net for our most vulnerable populations.   In many communities, the clinic remains the primary treatment resource for mental health consumers. 

Historically, the role of clinics has generated a clinic culture focused on symptom stabilization and long-term treatment.  However, the demands of consumers and families have changed and these practices need to change with them.  Many consumers and families are now insisting on a model of care that fosters the hope of recovery and builds on the strengths of the whole person to assist them in building a meaningful life in their community.

The need for change has been widely recognized.  Over the two years, the OMH and its many stakeholders have engaged in a dynamic process to redesign the role of clinic treatment.  This vision builds upon the idea of a life in the community for all persons.  This goal is based on the principles of recovery and resilience and strives to provide services to achieve the individual’s optimal integration in his or her community.

Clinic is defined as a distinct level of care which is integrated into a system of recovery and resiliency that includes specialty services, such as case management, vocational, and wellness services.  Consumers and families have rapid access to clinic treatment when necessary and are provided with quality services that reflect our knowledge of best practices including treatments for co-occurring substance abuse disorders.  These services are provided only for the length of time necessary to achieve the intended outcome for each individual.

In an effort to begin implementing this vision, OMH recently released standards of care for clinic treatment for adults and children.  These guidelines are a first step in articulating the basic tenets of good clinical care and accountability. While these have been longstanding expectations, they have not been consistently communicated or met. These fundamentals should be occurring in all clinics now.  They should become the building blocks for our redesigned clinic of the future. 

Consistent with these standards, a re-designed clinic should provide a "clinical home" for high need adults.  For those at high risk of poor outcomes, there needs to be a renewed emphasis on outreach, engagement and accountability for care.  Clinics, as the locus of treatment, will need to monitor individual care to ensure that the type and extent of care is appropriate, and that individuals are encouraged to pursue life goals, including employment and school. 

For children, the goal is to identify childhood emotional disturbances earlier, to engage children and their families more effectively in treatment and to intervene with treatments that have been shown by science to work.  Child and Family Clinic-Plus is a model for the clinic of the future.  The integration of the new vision for clinic with the standards of care for children is characterized by services that are more proactive and systematic in detecting emotional disturbance and engaging children and families that have been previously under served in treatment.

Overall, the clinic of the future should be a place where the individual is provided high quality care which fosters a sense of hope in the consumer and his or her family.  These programs should provide the building blocks necessary to achieve the promise of a quality life with meaningful roles for the person in his or her world.  To achieve this vision, clinics must embrace the challenge and the new paradigm of service delivery. 

The transition to a new clinic system will not be simple.  Over the decades, the complexity of financing and regulation has grown exponentially.  The services and fiscal model that follow, however, have been built upon the values and guiding principles identified by the stakeholder groups as well as the operational realities and challenges that providers face on a daily basis.  These principles are summarized in Chart 1 below.

Chart 1: Guiding Principles for Clinic Restructuring

  • Clinic is treatment with a defined set of services, (e.g. assessment, therapy, medication, crisis services). 
  • Restructuring should facilitate improvements in the quality of care including:
    • Identification and engagement of clients;
    • Access to treatment services (including off-site and in the home);
    • Clinical assessments including for co-occurring disorders
    • Presumption that clinic is the "clinical home" for most clients;
    • Regular use of evidence-based and promising treatment practices; and
    • Commitment to individualized treatment planning and individual recovery
  • Financial Restructuring should:
    • Pay based on the efficient and economical cost of providing quality services;
    • Phase out rate add-ons such as COPS and CSP;
    • Provide regular evaluation of prices and cost;
    • Set differential payments for procedures that reflect cost differences based on type of population, geography, staffing, venue, and service;
    • Provide sufficient funding to allow training and supervision to implement evidence-based and promising treatment practices;
    • Provide incentives for risk adjusted positive outcomes (to be developed);
    • Allow billing for multiple services in the same day; and
    • Use HIPAA compliant billing codes.
  • Restructuring should promote recovery, resiliency, wellness, and family and peer support.
  • Restructuring should promote staff retention and workforce development.
  • Restructuring should address how future professionals (e.g., MSW and psychology interns) receive training in the delivery of clinic treatment services.
  • Restructuring should address the funding of indigent care.
  • Restructuring should address Medicaid managed care plans’ underpayments to providers.

Proposed Clinic Services

To help make this vision a reality, OMH is proposing a restructured clinic system with 10 distinct clinic services (see Table 1: Clinic Service Descriptions).  This system should help providers, consumers, and families by funding services that improve outreach, engagement and access to care.  Providers will be paid to deliver services that are offsite, during the evenings and on weekends, and in languages other than English.  They will also be paid more when they provide the complex non face-to-face care coordination services that many seriously ill clients require. 

For each of these services, Appendix 3 identifies the following details:

  • Services required for a clinic license;
  • Draft CPT billing codes and definitions;
  • Proposed minimum staff qualifications for each clinic service;
  • Flexible service locations (onsite, offsite, home);
  • Target populations; and
  • Proposed modifiers that could affect the cost of delivering services (e.g., off-site, language, etc.)

Most of the services in Table 1 are required to be offered by all clinic providers.  However, not all of the services are applicable or reasonable given workforce and target population issues.  Some of the services are appropriate for a relatively small portion of clients.

Table 1: Clinic Service Descriptions

  Service Name Service Description
1 Outreach & Engagement - offsite
(new or existing client)
Contact to begin and enhance the engagement process with clients who are reluctant to participate in treatment services. Intent is for a peer, family advisor, or higher level service provider to meet with and help potential or current clients work through their resistance to or fear about participating in treatment.  The service also includes therapeutic intervention designed to intervene early to prevent a psychiatric crisis.

The service is initiated in response to a request from clients, staff or a family member.  Services could be provided in any location but are not Medicaid reimbursable in jails, prisons or other Medicaid reimbursable locations.

2 Initial Mental Health Assessment, Diagnostic Interview, and Treatment Plan Development (new client) Up to three face to face interviews with the consumer, and collaterals performed at the beginning of a treatment episode, to collect information resulting in a diagnosis and person centered treatment plan. 

The information collected will be used to determine admission to clinic level of treatment (or other disposition).  A quality assessment must contain (but may not be limited to):

  • Chief complaint
  • Client’s desired outcomes and motivations
  • Individual (family) strengths and needs
  • Medical, physical history including the relationship between physical and mental health issues
  • Trauma history
  • Substance use history
  • Work or school history
  • Developmental Assessment (for children as appropriate)
  • Personal history
  • Parent/family status
  • Current medication
  • Tests and measures (as appropriate)
  • Mental health status (as appropriate)
  • Risk assessment including but not limited to health, family status, loss of children, risk to self and others, loss of housing

1st visit can be offsite to assess the homebound status of adults.
1st visit can be offsite to assess the need to treat children offsite.

A clinic may bill this service for unscheduled non-clients who require immediate assistance whether or not they are scheduled to come back for an additional visit.

A clinic could also bill this service for an on-site psychiatric consultation which includes an evaluation, report or interaction between the psychiatrist and another referring physician for the purposes of diagnosis, integration of treatment and continuity of care. (a face-to-face evaluation is required)
3 Psychiatric Assessment (existing patient) An interview with a consumer, child, family, or other collateral performed by a psychiatrist (or Nurse Practitioner in Psychiatry (NPP) or Physician’s Assistant within scope of practice), which may occur at any time during the course of treatment, for the purposes of diagnosis, treatment planning, medication therapy, and/or consideration of general health issues.
4 Psychiatric Consultation A face to face evaluation of a consumer by a psychiatrist including the preparation evaluation, report or interaction between the psychiatrist and another referring physician for the purposes of diagnosis, integration of treatment and continuity of care. (video tele-psychiatry is acceptable)
5 Crisis Intervention Clinical intervention with an existing client or collateral of the clinic. Crisis covered services need not be anticipated in a treatment plan and except where limited by CPT code, these services may be provided by phone or in person. The minimal service expectation is that each clinic will have the capacity (directly or by agreement) to respond with a clinician to existing clients via phone 24/7.

At the clinic's option, a program may provide face-to-face crisis services 24/7.

(For unscheduled non-clients who present in need of immediate assistance see note in service 2).
6 Psychotropic Medication Administration Time spent preparing, administering, and managing the administration of psychotropic medications.  (Can be billed in addition to direct billing for Risperdal Consta).

Includes consumer education as necessary. Includes health status screening as appropriate.

7 Psychotropic Medication Treatment Monitoring and evaluating target symptom response, ordering and reviewing diagnostic studies, educating and writing prescriptions.  Includes health status screening as appropriate. Includes consumer education as necessary.
8 Psychotherapy Medically necessary therapeutic communication/interaction for the purpose of alleviating symptoms or dysfunction associated with an individual's diagnosed mental illness or emotional disturbance, reversing or changing maladaptive patterns of behavior, or encouraging personal growth or development.  Such therapeutic communication/interaction should promote community integration, and may encompass interventions to facilitate readiness for and engagement of the client and family in wellness self-management, school, and employment training services, which are provided by specialized programs and service providers.

Psychotherapy may also include an option with complex care management as shown at the end of this table.

9 Developmental Testing Administration, interpretation, and reporting of developmental testing to assist in the mental health diagnosis and treatment planning processes.
10 Psychological Testing Psychological evaluation using standard assessment methods and instruments to assist in mental health assessment and the treatment planning processes.
This service must be billed in conjunction with another service.  (Instructions to follow.) Complex Care Management4 Complex care management is not a stand alone service.  It must be provided as an ancillary service to psychotherapy.  It would be provided by a therapist or licensed professional.  It does not include standard report writing or brief follow up calls.  It is above and beyond normal care management and must be medically necessary.  The need for the care coordination and the persons contacted must be documented in the treatment plan.  Often it would be required to prevent a change in community status.  (This may be subject to some limits to be developed).

The need for complex care management can be driven by a variety of situations such as, but not limited to:

  • Coordination required to treat co-occurring disorders
  • Complex health status
  • Risk to self or others
  • Coordination necessary to break the cycle of multiple hospitalizations
  • Loss of home
  • Individual reluctant to engage in treatment and the clinic is not sure of the benefits of mobile treatment. 
  • Children and adults with multiple other service providers in need of coordination
  • Children at risk of school failure, expulsion or lack of school placement
  • Children at risk of out of home placement
  • Changes in custody status (from the parents’ or child's perspective)
  • AOT status and process

Care Coordination/Management

Care management is often critical to effective treatment.  At the clinic level of care it can be handled in several ways.

  1. Incidental Care Management.   This is brief incidental care management which can be delegated to any clinic staff. It is funded through overhead.
    • Example – a call to a client about a missed visit; a call to a landlord about the client getting evicted; or a follow up call to a school.
  2. Complex Care Management Related to Therapeutic Need.  This type of care management would be provided by a therapist or licensed professional.  This is above and beyond normal care management referred to in 1 above and does not include standard report writing or brief follow up calls.  As with all Medicaid services, it must be medically necessary.  The need for the care coordination (including the types of persons contacted) must be documented in the treatment plan.  Often this level of coordination would be required to prevent a change in community status. 

    Therapy with complex care coordination could be billed within five weekdays following a face-to-face visit. 

    • Example – The need for complex care management can be driven by a variety of situations such as:
      • Coordination required to treat co-occurring disorders
      • Complex health status
      • Risk to self or others
      • Coordination necessary to break the cycle of multiple hospitalizations
      • Loss of home
      • Individual reluctant to engage in treatment and the clinic is not sure of the benefits of mobile treatment. 
      • Children and adults with multiple other service providers in need of coordination
      • Children at risk of school failure, expulsion or lack of school placement
      • Children at risk of out of home placement
      • Changes in custody status (from the parents’ or child's perspective)
      • AOT status and process
  3. Targeted Case Management.   The needed care management is more than incidental.  The client is referred to a Comprehensive Medicaid Case Management (CMCM) program. 
    • Example – the client is in need of longer term linking, referral and coordination to other programs such as family support, employment, physical health, housing, etc.

Mental Health Clinic Reimbursement – The System as Currently Constructed

Mental health clinics serve a relatively diverse range of clients depending on their organizational and community characteristics.  Funding comes from a mix of Medicaid, Medicare, Medicaid managed care, private insurance, and those self-paying.

The New York State Medicaid plan authorizes reimbursement for a set of mental health services fundable under the Medicaid Clinic state plan option.  OMH has essentially two Medicaid rate methodologies for paying for licensed mental health clinics; one for free-standing clinics (Article 31 clinics) and another for mental health clinics co-licensed by the Department of Health (Article 28 clinics).  The latter are located in hospitals or diagnostic and treatment centers ("D&TCs").

Medicaid reimbursement for outpatient clinic services includes a Medicaid base fee and supplementary payments.  The base fee is based on nearly 20 year old costs and estimates of appropriate productivity adjusted for several COLAs in intervening years.  Base fees are promulgated in OMH’s regulations (14 NYCRR Part 588).

Additionally, there are two main supplementary payments, or add-ons:

  • Comprehensive Outpatient Programs  (COPS) – used to fund clinic services
  • Community Support Programs (CSP) – used to fund community support programs.  The amount or distribution of CSP funding will not be changed as result of this project.

Free standing (Article 31) providers in the New York City metropolitan area receive a higher base fee than providers in Upstate New York.

Rates for hospital-based clinics (Article 28) are hospital-specific.  They are determined on a cost related, provider specific basis, utilizing DOH’s outpatient department methodology. They are composed of an operating component capped at $67.50 and an uncapped capital component. OMH requires these mental health clinics to follow OMH program regulations and seek Medicaid reimbursement using the "rate codes" (service categories) outlined in OMH regulations. 

OMH’s current Medicaid reimbursement strategy identifies three service categories:

  • Brief visit – for individuals
  • Regular visit – for individuals, collaterals, and crisis
  • Group rate - for all varieties of "groups"

Both Article 31 and Article 28 clinics are required to specify which visit type was performed in both the consumer’s record and on claims for Medicaid reimbursement.  On the claims for Medicaid reimbursement, these visit categories do not otherwise identify the purpose of the visit, (except crisis, collateral, and group collateral), nor the qualification of the clinician providing the service. 

Article 31 providers are paid different amounts for these visit categories.  Article 28 clinics are paid the same amount for each type of visit.  OMH currently allows reimbursement for only one service per consumer per day, except for crisis and collateral services.  Where a provider does deliver more than one service in a day to a client, OMH does allow the providers to seek reimbursement for the service with the highest fee.

COPS and DSH

Through the 1980s, most OMH-licensed mental health clinics also received OMH-sponsored Local Assistance.  Local Assistance was distributed to counties and providers to support:

  • Activities not eligible for Medicaid reimbursement;
  • Medicaid-reimbursable services for individuals not eligible for Medicaid; or
  • To supplement Medicaid fees or other third party payments where the county and OMH agreed the applicable Medicaid rates were inadequate to support services in the community. 

Funds were allocated based on county plans submitted annually to OMH

COPS and DSH: Beginning in the early 1990s, OMH replaced almost all the Local Assistance received by mental health clinics with COPSCOPS supplements are based on historic allocations of various OMH-financed Aid to Localities funds and county allocations.  The current COPS reimbursement methodology was implemented in 1991 and has remained substantially unchanged apart from periodic COLAs and the conversion of additional Aid to Localities funds.  Additionally, some hospital clinics had some of their Local Assistance replaced with a special allocation of Disproportionate Share Payments to Hospitals ("DSH").   Although OMH has not increased the base Medicaid rates since 2005, COPS has received several COLAs.  OMH also created a new COPS category for clinics previously ineligible for COPS.

How much Medicaid, COPS, and Local Assistance go to OMH licensed clinics?

In 2007, clinic revenues associated with Medicaid and State aid amounted to $526 million. This funded approximately 3.3 million units of clinic services. Sixty-nine percent of the funding went to Article 31 free standing clinics while thirty-one percent went to clinics dually licensed by the OMH and DOH as Article 31 and 28 clinics.

Table 2: Medicaid Mental Health Clinic Visits, Reimbursement, and Local Assistance (Millions of Dollars, 2006-07 NYC, 2007 Rest of State)

  Article 31 Article 28 State Total
Fee for Service (FFS) Units Unweighted 2,291,929 1,024,412 3,316,341
Base Medicaid $ (No COPS) $137.7 $57.0 $194.7
Estimated ’07 COPS Medicaid FFS Threshold $116.3 $46.4 $162.7
Medicaid $ for Dual Eligibles (Medicare/ Medicaid) $36.0 $16.0 $52.0
Medicare $ for Dual Eligibles (Medicare/ Medicaid) $7.8 $17.7 $25.5
Medicaid Managed Care Visits with COPS Only Payments 291,124 107,953 399,077
Estimated ’07 COPS- Only Medicaid Threshold $38.6 $8.4 $47.0
Disproportionate Share Payments (DSH) $0.0 $7.7 $7.7
NYS Aid to Localities and Contract Dollars $24.5 $11.9 $36.4
Total $360.9 $165.1 $526.0

In addition to this funding, clinics received another $49 million in Medicaid Community Support Program funding (CSP).  This funding is not part of clinic restructuring and will remain in place for the foreseeable future.

Effective July 2008, OMH increased the minimum reimbursement for a clinic visit to about $100 for NYC and its suburbs (base rate plus COPS and quality improvement supplement).  The rate is proportionately less in other regions of the State.

Why Change Clinic Reimbursement?

New York’s Medicaid reimbursement methodology for clinic services needs to change.  While conversion to COPS and DSH replaced 50% of Local Assistance with the Federal share of Medicaid, it had some unintended and problematic consequences. 

  • COPS allocations don’t reflect changes in need.  Currently, within specified limits, counties can move COPS from one provider to another.  However, this is a complex and difficult process.  As a result, COPS funds are rarely moved to reflect changing State and local priorities or the profile of consumers.    
  • Variations in cost and productivity.  The consequence of "freezing" COPS for clinics allowed substantial variations to develop over time, in provider unit costs, staff complements and productivity.
  • Unintended use of fundsCOPS funding was originally intended to support local planning, emergency services, the uninsured and accelerated access to clinic services for those recently discharged from hospitals and Comprehensive Psychiatric Emergency Programs (CPEPs).  As COPS rates climbed and base rates stayed flat, COPS transformed into funding that supports the basic cost of clinic services, unique provider programs, and other uncompensated costs.
  • De-professionalized workforce. The current methodology pays the same rate for all individual services of the same duration irrespective of the clinician’s qualifications.  According to the Workgroup, this has encouraged some clinics, in the face of generally inadequate rates, to "de-professionalize" their staff complements, presumably reducing the general quality of the services they offer.
  • Failure to comply with changing Federal Medicaid rules.   Federal rules for Medicaid are in a continual state of flux and federal audits for waste, fraud and abuse are on the increase.  Additionally, Medicaid payments must be for the efficient and economical provision of services. 

Proposed Reimbursement Methodology

Based on the advice of the OMH Clinic Restructuring Workgroup, OMH has developed a new procedure-based (CPT) clinic reimbursement methodology that:

  • Eliminates COPS payments;
  • Establishes new peer group base rates; and
  • Uses CPT billing codes.

This fulfills the requirements of the Federal Administrative Simplification Act (HIPAA) and the NYS Medicaid reimbursement redesign underway at DOH (see discussion of APGs below).

OMH recognizes that providers bill multiple payers. Therefore, OMH sought, where possible, to use clinic services and procedures that are recognized by Medicare and other insurers. This will also minimize coverage carve outs of some clinic services by other payers. However, it is understood that not that all services or the proposed procedure codes and "modifiers" will be recognized by payers other than Medicaid.

Further, this design must be approved by DOH (NY’s single state Medicaid agency) and the federal Centers for Medicare and Medicaid Services (CMS). By law, these approvals are required before these changes can be made. Therefore, the specifics of this design are subject to change. OMH will, however, make every effort to preserve the values of the design should the details have to be modified.

Payment for Services

A key objective of the new reimbursement system is to drive the objectives of clinic restructuring.  For example, reimbursement should "incentivize":

  • Access to care;
  • Integration of care;
  • Elimination of unnecessary trips by consumers by encouraging delivery of medically necessary procedures on the same day;
  • Comprehensive attention to consumers’ clinical condition and needs;
  • Delivery of appropriate services to individuals;
  • Responsiveness to crises;
  • Consumer friendly hours and service locations (nights and weekends); and
  • Services provided in languages other than English.

Several elements of the new reimbursement system help to accomplish this goal:

  • Providers will bill for specific clinic services;
  • Many services will have "optional" payment modifiers to account for off-site services, evening and weekend hours of service, and non-English service provision;
  • Payments for different procedures will reflect the relative cost of the staff required to deliver each procedure;
  • Assessment and therapy services provided by psychiatrists and other physicians will be reimbursed by Medicaid through the physician fee schedule.  This will be paid in addition to the regular Medicaid reimbursement for the appropriate underlying service. 
    • For example, if in the course of a psychotherapy service delivered by a social worker a psychiatrist steps in for 15 minutes to discuss unexpected symptoms, the clinic will be reimbursed for the full duration of the visit with the social worker and be reimbursed for the psychiatrist off the physician fee schedule;
  • Crisis services will be reimbursed for their duration, either face-to-face or by telephone, subject to a limit to be developed; and
  • Providers will be reimbursed for more than one service provided to an individual consumer in a day (subject to certain limits to be determined). 
    • This should reduce the inconvenience to consumers for visits on successive days necessitated by the rigidity of the current reimbursement rules.  It should also increase provider efficiency and reduce the number of missed visits.

APGs

Different incentives are embedded in various reimbursement methodologies.  Our current threshold system pays a flat price for every visit.  This methodology encourages providers to do the least during a visit and serve the least ill clients.  Paying for every service that is included during a visit encourages providers to provide the most services possible.  A compromise approach that attempts to remove the disincentive to serve persons with higher needs while not encouraging the over provision of services are Ambulatory Patient Groups (APGs).  Under this methodology, providers report every procedure delivered but the methodology automatically groups and discounts services where efficiencies should reduce costs.

The NYS Department of Health (DOH) is in the process of replacing the current "threshold visit" methodology with APGs.  OMH is committed to integrating clinic restructuring with this system. 

During the development of behavioral health APGs, OMH and DOH will determine the "weight" (relative resource use) for each psychiatric procedure (the services in Table 1) relative to a "standard" weight.  The APG system will multiply each procedure’s weight by a "base rate" to determine the actual reimbursement for a particular procedure or group of procedures delivered to a particular consumer.

Providers in a particular "peer" group have common base rates.  The weights for each procedure or groups of procedures will be identical, irrespective of the "peer group" of the provider.

APGs are designed to capture the administrative efficiencies associated with providing more than one service to the same consumer in a day.  Administrative necessities such as consumer sign in, record keeping, etc. may represent a significant percentage of the time for an individual medical procedure (e.g., blood drawing) but need not be duplicated when a patient receives more than one procedure at the same time. 

In psychiatric clinics, the costs of sign-in, record keeping, etc. represent a very small percent of time for almost any procedure, since most procedures are measured by duration extending beyond 15 minutes.  Therefore, OMH anticipates little or no discounting in the APGs for psychiatric clinics.

Importantly, providers will not, on a day-to-day basis, need to be concerned about the procedure groupings in each APGs.  Medicaid claims will simply list out all the procedures delivered to a consumer during a visit.  The 3M APG grouper will be integrated with the state’s eMedNY billing’s system and will calculate the appropriate reimbursement.  (Providers can also purchase access to this grouper from 3M).

Payment Features

In contrast to the current threshold payment system, the restructured system will reimburse providers for the actual services delivered. After transition, all providers in the same peer group, delivering the same services will be paid the identical amount.

Ultimately, rate setting will be impacted by how much money is available and the expectations of the volume of services for each new clinic service. Table 2 provides a summary of 2007 Medicaid-related and state aid funding for clinics. These funds, once adjusted for 2008 changes and prospective 2009 state budget changes, represent the approximate pool of available dollars for clinic restructuring. However, the amount of funding available for rebasing mental health clinic Medicaid rates will not be known until after the 2009-10 state budget is passed.

Some portion of these funds may need to be used to help address underpayments to clinics by Medicaid managed care plans as well as the costs of indigent care. Some funds may also be reserved to help individual providers transition to APGs. The final distribution to these funding pools will not be clear until the New York State 2009-10 budget is passed.

Additionally, OMH is exploring prospective “pay-for-performance” options. The initial measures are likely to be very basic and will be refined over time. At first, OMH will only track provider performance against these measures. In succeeding years, OMH will distribute a portion of increased funds for clinics based on a provider's performance.

Phase-in/Transition

The restructured reimbursement system will not commence before January 2010. Several key tasks remain before OMH and DOH can proceed. These include developing regulations and obtaining approval from State and Federal agencies.

The current reimbursement plans project a four-year phase-in. In the initial year, providers will be paid 75% of the amount they would, on average, have received under the current Medicaid system and 25% of what they are calculated to receive under the new system. In the second year, they will receive 50% of their “old” payment, and 50% of the new payment. In the third year, their payments will be 25% “old” and 75% “new”. In the fourth year, the COPS add-ons will entirely disappear and 100% of the new system will be in place.

OMH hopes to minimize the administrative complexity of transition. During and after the transition, providers will generally need to submit one claim for each visit capturing all procedures. An additional claim will need to be submitted for each service billed off the physician fee schedule. The Medicaid system will automatically attach each provider's old payment to the APG (procedure) service paid. The old payment will decline each year as the APG payment increases.

OMH and DOH reserve the right to adjust the old and new payment amounts throughout the phase-in process should the new volume generate payments significantly in excess of the base-level Medicaid disbursements.

OMH and DOH have not yet determined how to assure that clinics will receive the full payment for services to individuals enrolled in Medicaid managed care.

Prospectively, there will be some type of indigent care pool of funds available to offset the costs of services to individuals without any third party coverage. All payments from the pool will be based on unreimbursed costs up to the newly established Medicaid rates, not providers' costs. OMH will be developing policy and procedures regarding consumers' eligibility for uncompensated care and the standards for sliding fee schedules.

The key elements of reimbursement are summarized below.

Key Elements of Reimbursement:

CPT/HCPCS Codes: Clinic services identified in Table 1 will be billed using CPT/HCPCS codes that reflect time spent (visit duration), service location, and practitioner qualifications. (see appendix 3).

Non Face-to-Face Activities: Providers will be able to bill for non face-to-face time spent coordinating care for complex cases. Time spent must be medically necessary and documented in the consumer's chart. (Some limits will be established).

Multiple Same Day Services: Providers will be allowed to seek reimbursement for multiple, medically necessary services on the same day to reduce the need for consumers to make multiple trips for complementary services, and minimize missed appointments. (Some limits will be established.)

Physician Billing5: For some services, providers (or providers and physicians if they are contractors) will submit two claims for reimbursement for services provided by physicians. Where applicable, the physician component will be billed using the physician fee schedule. The provider will simultaneously claim the underlying “facility” charge for the duration a doctor was present or the medically necessary duration of time another clinician acting within their “scope of practice” was present. These provisions will apply to video telepsychiatric services.

APGs (“Ambulatory Patient Groups”): The NYS Department of Health (DOH) is implementing a new outpatient reimbursement methodology called APGs. This will replace its current “threshold visit” methodology for hospital outpatient department (OPD) and diagnostic and treatment center (D&TC) reimbursement. APGs use CPT procedure codes. Individual procedures and APGs are weighted based on diagnosis and other factors that affect resource use. OMH is committed to using APGs as the basis of its final reimbursement recommendations. OMH will be working with DOH and the Office of Alcoholism and Substance Abuse Services to develop appropriate APG procedure groupings and modifiers.

Base Rates: The APG system establishes weights for each APG. Reimbursement is based on the weight of the APG multiplied by a base rate for a class of providers (peer group). Conceptually, a class of providers could be all mental health clinics in the State, clinics in each OMH region, clinics serving mostly children, etc.

Weights”: OMH expects to establish “weights” for all procedures based on the minimum qualifications for staff permitted under OMH regulations to deliver a particular procedure. Apart from the weights for services expected to be delivered by physicians, OMH plans to establish different weights for services expected to be delivered by:

  • Psychologists;
  • Nurse Practitioners/Physicians' Assistants;
  • LCSWs/LMSWs/RNs/psychoanalysts/other licensed counselors; and
  • Peers/family advocates/approved others.

Offsite Payments: Offsite services are restricted to services for children up to and including age 18 and for persons determined to be homebound. Homebound individuals include people who have a physical and/or mental illness that prevents them from leaving their residence. The first initial assessment visits can be used to determine if an adult is eligible for homebound off-site services. A billing code modifier will be used to track off-site service locations. Additionally, outreach and engagement services will also be done offsite and are not subject to the homebound limitations.

Other Payment Adjustments: OMH will adjust payments through either procedure codes, procedure code modifiers, or multiple procedures for:

  • Complex visits;
  • Visits conducted in a language other than English;
  • Visits delivered outside of normal business hours; and
  • Visits provided in non-licensed locations – subject to some restrictions.

Overhead: The rate for all procedure codes will include reimbursement for such overhead activities as general care management, clinical supervision, record-keeping, billing, training, general agency administration, etc.

Students/Internships/Supervised Services: OMH is reviewing the workforce development, cost, reimbursement, and clinical supervisory implications of the use of students as clinicians in clinics. As part of their overall staff recruitment and development plans, many clinics have entered into agreements with educational institutions whereby the clinic provides student field placements for clinical training and supervision. Under the new clinic model, clients at a clinic should generally expect to receive services provided by professional level mental health staff, which may necessitate changes to these agreements to ensure that professional staff supervises these sessions. These arrangements will need to be described in a clinic's OMH approved staffing plan and in the clinic's policies dealing with students (see Role of Students in OMH Licensed Clinic Treatment).

Rules and requirements for student supervision and billing for visits done by students have not yet been established.

Rebasing”: OMH's proposed reimbursement design has more variables that impact total Medicaid expenditures than the current reimbursement methodology. Initial base rates and weights will be best estimates regarding staff distribution, productivity, etc. Should actual reimbursement patterns be different than anticipated, it will have unintended consequences. OMH will, therefore, “rebase” periodically.

Performance/Outcomes. As the restructured clinic program is implemented, OMH will examine possible criteria to implement a “pay-for-performance” system that can be administered as adjustments to Medicaid payments.

Transition/Phase-in. OMH expects that providers will transition from the current reimbursement system to the new reimbursement system over four years (as described above). During the transition, providers will submit only one claim for each procedure (except for physician services) but will be paid a combination of the old reimbursement system and the new system. (see Phase-in/Transition).

OMH anticipates that the new system will continue to supplement clients who are dually eligible for Medicaid and Medicare by paying the difference between what Medicare paid, and the higher of the Medicare approved amount or Medicaid rate.

Uncompensated Care

Addressing indigent/uncompensated care is a critical aspect of restructuring. OMH is committed to developing a pool of funds to pay for indigent/uncompensated care. Distributions from the pool will be based on a methodology similar to that used by DOH in hospital-based clinics and Diagnostic and Treatment Centers. Some key elements of the current DOH D&TC system include:

  1. Indigent Care is defined as services to the uninsured.
  2. Payments are based on actual units of service provided to the uninsured valued at the applicable Medicaid rate for the service, less expected client payments.
  3. Payments to providers are made on a progressive coverage scale.
  4. Provider eligibility for payments requires compliance with the terms of the Patient Financial Aid law.  Compliance involves:
    1. Client eligibility based on 300% of the FPL (currently $10,400 per-person plus $3,400 per additional person);
    2. Sliding scale discount schedule as defined in the Law;
    3. Clear client communication practices (including language requirements); and
    4. Compliance with terms regarding collection agency referrals and treatment of billings for services retroactively covered by Medicaid.
  5. Provider reporting on audited cost reports require uninsured units of service by type of service, valued at the Medicaid rate, less actual payments from clients.

Medicaid HMOs/State Insurance Plan Underpayments

Medicaid managed care, Family Health Plus and Child Health Plus plans underpay for mental health clinic services. The average managed care plan payment for clinic services (without COPS) is approximately one-third to one-half of actual cost. This is significant because Medicaid managed care alone represents 12% of clinic visits. This percentage is expected to grow as the State expands mandatory managed care enrollment. To ensure continued access to clinic services, OMH needs to address Medicaid managed care plan underpayments. Additionally, OMH and DOH need to monitor managed care plans to ensure appropriate member access to mental health services.

Licensing Revision and Standards

OMH currently licenses clinic treatment programs to provide a range of services pursuant to existing regulations, Parts 587 and 588 of Title XIV. These regulations were publicly reviewed and subsequently adopted as part of New York State's federally approved State Medicaid Plan. In order to implement the new array of clinic services and the billing and rate codes which link to these new services, OMH needs to adopt revised clinic regulations.

OMH is currently starting the internal process of converting the recommendations of the Restructuring Workgroup into draft revised clinic regulations. As mentioned, these revised regulations will need to be approved by the DOH and the federal government as part of New York's State Medicaid Plan before they become operational.

OMH oversees the Prior Approval Review Process (PAR) (Part 551 of Title XIV) which requires the Commissioner's approval of new licensed programs or significant changes to the operation of existing licensed programs. Since existing clinics will not change licensing categories when the new clinic regulations become effective, they will not need to be reviewed under the PAR process. However, the revised clinic regulations will contain a “transition” section, and depending upon what is eventually included in that section, clinics may be asked to submit current information or plans for future operation when the new regulations become effective.

Program Leadership, Supervision and Standards

Under the new clinic model, programs will be reimbursed in a manner which better reflects the costs of providing services, as discussed elsewhere in this paper. Included in these rates are overhead costs for staffing and non-staff expenses for the day-to-day operation of the clinic. As a governmentally licensed program, the new model will establish programmatic expectations in regulatory standards and guidelines that will look very different than a program of outpatient services operated by a private practice model. Staff costs for these quality of care, staff training, and interdisciplinary team activities will be reimbursed, for the most part, in overhead, resulting in a model for the delivery of clinic services that meets people’s mental health needs with higher quality services.

Clinic Director

The legal entity (county, hospital, not-for-profit) responsible for the clinic will be required to designate a highly qualified and experienced individual to function as the clinic director who will oversee the clinic’s administrative and clinical operation. One of the most important duties of the director is to assemble and maintain qualified, experienced, licensed and skilled staff members able to meet the unique service needs of the clinic’s client base. The resultant staffing plan must be approved by the clinic agency’s governing body as well as by the Office of Mental Health. The new model will rely heavily on a professional staffing approach to improve quality.

Psychiatrist

Psychiatrists (or psychiatric nurse practitioners) are senior clinical staff whose role in achieving effective treatment outcomes must be recognized in a transformed clinic. There is widespread consensus that the role of psychiatrists must be made more meaningful for the client and the psychiatrists. OMH proposes to shift to a model where:

  1. Psychiatrists (or psychiatric nurse practitioners) participate in treatment when appropriate and develop/approve treatment plans for clients who are being prescribed psychotropic medications and/or have significant co-morbid health issues.
  2. Other licensed practitioners develop/approve treatment plans for other clients.

Regulations will address requirements regarding the establishment of provider quality controls (including which clinicians may approve treatment plans).

Supervision

The clinical supervisory relationships within the clinic need to be explicit as clinical supervision is key to monitoring and improving services. Responsibility for clinical oversight must be lodged in a qualified and experienced clinician. This individual is usually the clinic’s director but, depending on the size of the clinic and the credentials of the director, may rest with a clinical or medical director. Many larger clinics have clinical directors, medical directors and administrative directors who report to the clinic’s director. Whatever organization is utilized, it is crucial that the lines of clinical supervision are clear and that the clinic has adopted internal procedures to ensure that clinical supervision is effectively carried out.

Role of Students in OMH Licensed Clinic Treatment

Clinic treatment programs licensed by the Office of Mental Health are a significant field placement site for students in clinical training programs. This function strengthens the clinic’s connection with local universities, creates and energizes a learning community within the program and is an effective tool to aid in the recruitment of new full-time clinic staff. In the interest of delivering the highest possible care to the individuals served by the clinic, the following parameters should apply to clinic field placement and reimbursement for students:

  • A written agreement should exist between the clinic and the State Education Department (SED) accredited higher education institution.  The agreement should include provisions regarding :
    1. The selection of students.  All students should be enrolled and in good standing in a graduate degree program in a field leading to one of the mental health disciplines approved to provide clinic services, and should possess any permits or approvals required by SED to participate.
    2. Supervision of the student.  In assigning students to clients, each supervisor should carefully assess the student’s skill and experience. Only licensed professionals on staff at the clinic should supervise students.
  • Clients of the clinic should be informed of the student’s status and agree to be seen by the student before services are initiated.
  • The supervision of students at a clinic should be clearly defined and included as part of the OMH approved clinical supervision plan and the clinic’s staffing plan.
  • Progress notes completed at the end of each session should be signed by the student and countersigned by the licensed professional designated as the clinical supervisor.

Staffing Credentials

Another factor that impacts clinical staffing and supervision as well as an individual's professional development is the need to accommodate standards set by the State Education Department and discipline-specific credentialing bodies. Clinic standards need to ensure that the frequency and mode of clinical supervision at a licensed clinic counts toward an individual staff member's progress in achieving higher levels of a credential or professional license.

In setting minimum staffing requirements and clinical supervisory expectations in standards, OMH acknowledges staffing shortages among professionals in some disciplines and will provide some flexibility in compliance. Program guidelines are planned which will provide clinics with additional information and give examples of alternative methods of compliance. At the same time, OMH is cognizant of the statewide nature of these staffing and supervision issues and will work with other agencies to solve or ameliorate them.

Quality Improvement

In addition to staffing and clinical supervision, clinic directors under the new model will be expected to oversee quality improvement procedures. The following tasks will take place at very different levels of complexity given the differences in size and settings within which a clinic operates:

  • Basic quality management functions such as checking credentials, doing background checks, and verifying the currency of professional licenses;
  • Carrying out risk management practices which may range from the establishment of criteria to increase the monitoring and supports for some clients, to guidelines for responding to crisis situations or incidents, or to the legal and fiscal implications of documentation practices;
  • Collecting and analyzing outcome data necessitated for quality improvement, performance based reimbursement, and billing; and
  • Ensuring that mechanisms are in place to monitor compliance with external standards such as those established by OMH for licensure and reimbursement purposes, and by accrediting agencies such as JCAHO or CARF.

Mental Health Clinic Restructuring Workgroup

Committee Chairs

Workgroup Chair – Kristin M. Woodlock and Dawn Lannon, New York State Office of Mental Health

Finance Committee Chair – Glenn Gravino, CCSI Consultant

Clinical/Programmatic Chair – Marshall Beckman, Ulster County, NY

Coalition of Behavioral Health Agencies
Amy Dorin – F.E.G.S.
Patricia Gallo-Goldstein - Coalition
Dewey Howard – ICL
Karyn Krampitz  - Coalition
Phillip Saperia – Coalition
Dan Still – Coalition
Boris Vilgorin – F.E.G.S.

Conference of Local Mental Hygiene Directors
Sharon Aungst -  New York City
Pat Brinkman – Chautauqua County
Phil Endress – Erie County
Joe Patterson – Schoharie County
Melissa Staats – Westchester County
Cynthia Summers – New York City
Anne Zweiman – New York City

Children’s Coalition
Vic Cochetti
Nancy Fella –Hillside Family of Agencies
Pamela Madeiros –Day Treatment Coalition
Todd Schenk – Jewish Board
Andrea Smyth - Coalition for Children's Mental Health Services

Families Together
Ruth Foster
Paige Pierce

Federation of Mental Health Centers
Mike Countryman – Family Counseling Center
Elaine Lederer – Long Island Consultation Center
John Rossland  - Bleuler Psychotherapy Center
Charles Weber

Greater New York Hospital Association
Allison Burke – GNYHA
John Kastan – Saint Vincent’s Hospital
David Menashy – New York City HHC
Joyce Wale - New York City HHC
Elisabeth Wynn – GNYHA

Healthcare Association of New York State
Scarlet Clement-Buffoline – Samaritan Hospital
Darcie Hurteau - HANYS
John Kelley – Saint Mary’s Hospital
Cindy Levernois – HANYS
Paul McArthur - Strong Memorial Hospital

Mental Health Association of NYS
Glenn Liebman
John Richter

NYAPRS
Dick Jaros – NYAPRS
Harvey Rosenthal – NYAPRS
Edythe Schwartz – Putnam Family
Peter Trout – BHSN

NYS Council for Community Behavioral Health Care
David Alloy – Glens Falls Hospital
Lauri Cole - NYS Council
Audrey LaFrenier – Parsons Child and Family Center
Jim McGuirk – The Astor Home For Children
Erin Ryan – Horizon Health

NYS Psychiatric Institute
Susan Essock

New York State Psychiatric Association
Deborah Cross – Westchester Medical Center
Richard Gallo - NYSPA
Barry Perlman – Saint Joseph’s Hospital
Seth Stein – NYSPA

New York State Rehabilitation Association
Amy Anderson Winchell – Occupations
Pat Dowse - NYSRA
Ken Rosenthal – Rochester Rehabilitation Center

United Hospital Fund
Sharon Salit

New York State Department of Health
Linda Kelly
Mark Tremblay

New York State Office of Mental Health

Joyce Billetts Robin Krajewski
Bob Blaauw Dawn Lannon
Donna Bradbury Tim Murphy
Barry Brauth Kristin M. Woodlock
Norman Brier Emil Slane
Gwen Diamond Tony Trahan
Sheila Donahue Gary Weiskopf
Martin Gallup Donald Zalucki
Suzanne Gurran Jay Zucker

Consultants

Larry Chase Glenn Gravino
Donna Peri James Monfort

  1. Comprehensive Outpatient Programs (COPS).
  2. See Appendix 1 and 2
  3. Comprehensive Outpatient Programs (COPS). This is a Medicaid payment rate add-on for clinics and selected other outpatient providers.
  4. See Care Coordination/Management
  5. Includes psychiatric nurse practitioner.

Comments or questions about the information on this page can be directed to the Bureau of Financial Planning.