States' embrace of managed mental health care

Historically, state mental health authorities have dominated public mental health services, operating with fixed resources and responsible for a large population. A good public mental health system has many of the attributes of a well-managed private mental health system. Unfortunately, public systems are not flexible enough to contract creatively with multiple providers; they lack many of the tools of modern managed care. As a consequence, state mental health authorities have begun to contract with private managed care firms to assist them in managing their health care reform efforts, particularly reform of Medicaid. This paper examines the forces shaping managed behavioral health care in the public sector and describes strategies for managing care, such as contracting, utilization review, and monitoring.