Texas Senate Committee on Health & Human Services – SB 1177

Intensive mental health services for children and youth are critical. Through our statewide work supporting the needs of children, youth, and their families, as well as our in-depth assessments of the children’s system of care across the state we have identified substantial gaps in the availability of intensive home and community-based mental health services for children and youth with the most serious mental health challenges.

We have also found that most of the intensive, evidence-based practices (EBPs) that are known to have good outcomes for children and youth with the highest mental health needs (and their families) are not covered by the state under Medicaid – despite the fact that these services can be cost effective, especially when compared to inpatient hospitalization or residential care. Today, the primary evidence-based intensive intervention available to children and youth with intensive needs is Wraparound Service Coordination (Wraparound).

SB 1177 (Menéndez) would make EBPs available in all of its Medicaid managed care programs by updating the managed care contracts to include EBPs “in lieu of” other services. “In lieu of” services are alternative services or services provided in alternative settings that are delivered in lieu of covered services or settings. Similar language already exists in the current managed care contracts, which allows MCOs to provide inpatient services for acute psychiatric conditions in a free-standing psychiatric hospital “in lieu of” an acute care inpatient hospital setting for individuals between the ages of 21 and 64.

“In Lieu of” Services Currently Provided in Medicaid Managed Care
“In lieu of” services are allowed in the managed care regulations at 42 CFR 438.3(e)(2). There are four criteria under these regulations for “in lieu of” services under a managed care contract:

• The state must determine that the alternative service or setting is a medically-appropriate and cost-effective substitute for the covered service or setting under the state plan. This determination must be made under the contract, rather than on an enrollee-specific basis.
• The enrollee cannot be required by the MCO to use the alternative service or setting.
• The approved services must be authorized and identified in the MCO contract and offered at the MCO’s discretion.
• The utilization and cost of “in lieu of” services are taken into account in developing the component of the capitation rates that represents the covered state plan services.