Inter-Departmental Correspondence

Health Services Agency



March 18, 2004


April 6, 2004



Honorable Board of Supervisors


Margaret Taylor, Director, Health Services

Gale Bataille, Director, Mental Health Services



Managed Care Agreement with the State Department of Mental Health



Adopt a resolution authorizing the President of the Board to execute an agreement with the State Department of Mental Health for mental health Medi-Cal managed care services.



In April 1995, under a 1915(b) waiver granted to the State Department of Health Services (DHS) by the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), San Mateo was the first California county to implement a managed mental health care system for Medi-Cal beneficiaries. At the end of the initial two-year waiver period, the San Mateo Mental Health Services Division worked with DHS and the Department of Mental Health (DMH) to submit a second federal waiver request, which was approved effective July 1, 1998, and was extended through October 31, 2001. Since that time Mental Health Services has applied for and received waivers allowing the continued operation of our managed care mental health system. Our current waiver is for the period July 26, 2003 through July 25, 2005.


Mental Health Services Division provides a range of mental health services to approximately 5,500 Medi-Cal clients a year. Since 1995, annual DMH Managed Care Agreements have authorized the San Mateo Mental Health Plan to provide mental health services under the conditions of these federal waivers to Medi-Cal eligible clients and provides State General Fund revenue to support managed care and other specified services.



This agreement establishes interim rates for the mental health plan for Medi-Cal eligible clients. The agreement defines the requirements for quality assurance, record keeping, client rights, and availability and accessibility of services. In addition, it delineates the unique requirements of the San Mateo County waiver including case rate reimbursements, responsibility for medications prescribed by psychiatrists, and laboratory services. It also includes new requirements for Day Treatment Services, Therapeutic Behavioral Services, certification of program integrity, and the Health Insurance Portability and Accountability Act (HIPAA).


This agreement contains contingency provisions to assure the Division is not obligated to provide unfunded services if the state reduces the allocations for these services. The Mental Health Services Division budget for FY 2003-04 reflects the anticipated revenues for this program according to state budget planning thus far. This agreement provides funding for the current Medi-Cal managed care program, children's system of care and other specialized Medi-Cal services.


DMH will be amending the rate structure later this fiscal year. The amendment will be brought to you when it is received from the State.


Goals and Objectives

Performance Measures

2002 - 2003 Objectives

2002 - 2003 Actual

2003 - 2004 Objectives

Medi-Cal clients as % of total




Medi-Cal penetration rate




Pharmacy cost growth




Cost per client w/o pharmacy




Total cost per client





Vision Alignment

This Agreement with DMH keeps the commitment to Ensure Basic Health and Safety for All and goal number 8: Help vulnerable people-the aged, disabled, mentally ill, at risk youth, and others-achieve a better quality of life. The Agreement contributes to this commitment and goal by providing managed care mental health services to a vulnerable population.


Fiscal Impact

The interim amount of the agreement is $8,357,680 for FY 2003-04, an increase of $555,039 over the amount for FY 2002-03. This includes $5,856,000 as the state share of Medi-Cal expenses for pharmacy and related laboratory services. The actual amounts for FY 2003-04 are still to be negotiated by the State and will result in an amended agreement. In addition to the state allocation, Mental Health bills the State separately for the federal fee portion (FFP) of Medi-Cal. The anticipated federal revenue for case rates, TBS and pharmacy is approximately $23,000,000. The state and federal revenue is included in the FY 2003-04 Mental Health Services budget.