Psychiatric reimbursement reform in New York State: lessons in implementing change

The failure of an innovative and ambitious reform in the psychiatric reimbursement system of New York State is examined for specific lessons of value for other states as they implement new payment strategies to encourage improved treatment of the mentally ill in general hospitals and community settings. The New York payment system was comprehensive, embracing both inpatient and outpatient care, and had significant support in the hospital and professional communities. Still, its impact on hospital performance was small and only partially consistent with its goals. For mental health reimbursement reform to succeed, state administrators must provide more clear, sustained, and forceful signals that take account of the real barriers to implementation; they must also ensure that the financial incentives and rewards are recognized by those who carry out the actions needed to translate goals into reality.