Inter-Departmental Correspondence

Health Services Agency



May 20, 2004


June 8, 2004



Honorable Board of Supervisors


Charlene A. Silva, Director of Health Services

Gale Bataille, Director of 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 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 the interim allocation 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, and 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 requirements for Day Treatment Services, Therapeutic Behavioral Services, certification of program integrity, and the Health Insurance Portability and Accountability Act (HIPAA), and other program requirements.


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 proposed Mental Health Services Division budget for FY 2004-05 reflects the anticipated revenues for this program according to state budget planning thus far.


In previous years DMH has presented the agreement for managed care services to Mental Health during the fiscal year. There is a new federal requirement that all counties have their Medi-Cal agreements in place with DMH by June 18th in order for the ongoing release of federal Medi-Cal funding to continue.


Goals and Objectives

Performance Measures

2003 - 2004 Objectives

2003 - 2004 Projected Actual

2004 - 2005 Objectives

Medi-Cal clients as % of total




Medi-Cal penetration rate




Pharmacy cost growth




Cost per client w/o pharmacy




Total cost per client




* This objective is included in our Cultural Competence Plan required by DMH, and was developed prior to the availability of current data on increases in the number of Medi-Cal eligible clients. This goal will be re-evaluated in the next update to our Cultural Competence Plan.


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 $8,492,423 for FY 2004-05, an increase of $386,496 from FY 2003-04. The contract includes $5,856,000 as the state share of Medi-Cal expenses for pharmacy and related laboratory services. The balance of $2,636,423 is the state share of Medi-Cal expenses for other managed care activities and services. The actual amounts for FY 2004-05 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 $22,848,520. The state and federal revenue is included in the proposed FY 2004-05 Mental Health Services budget. There is no net county cost.