Cancellation of Managed Care Contract Creates Upheaval in Alabama's Mental Health System

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Blue Cross Blue Shield of Alabama and a large provider could not come to renewal terms, forcing 28,000 mental health patients to go elsewhere. Critics have said the episode is the latest in state's dismal record in mental health.

When Alabama’s largest insurer and a statewide mental health provider could not reach a new contract last month, the fallout was swift: 300 employees were laid off from Alabama Psychiatric Services (APS) on February 13, leaving 28,000 patients to find care elsewhere.

Blue Cross Blue Shield of Alabama had covered services for APS patients who had an “Extended Psychiatric Services” rider on their policy, which one provider described as a business relationship designed to contain mental health treatment costs. But when the 2 sides could not reach renewal terms, APS abruptly closed, and reaction in the past month has been harsh and highly public.

Critic have written letters to state news outlets decrying what they call Alabama’s dismal record in mental health. State Rep. Christopher England, D-Tuscaloosa, blasted the state’s plans to move forward with the closure of another mental hospital as the APS situation plays out. He noted that Mental Health America rated Alabama 49th for access to mental health services, even before this latest episode. Mental health experts who recently took part in discussion convened by The American Journal of Managed Care said there is great disparity nationwide in access, with Southern states especially bereft of providers.

BCBS of Alabama, appearing caught off guard by APS’ decision to not accept its terms, scrambled through early March to find new providers for thousands of patients. On March 3, 2015, it publicly released a list to Alabama media of where it was referring APS clients, complete with phone numbers. Published reports state that some APS staff have been hired at other practices, and one new entity took over an APS building. But an eating disorder clinic closed and has not reopened.


Not all patients are satisfied. On March 5, Decatur resident Christy Graham, a 41-year-old who suffers severe anxiety and rarely leaves her home, told that she had not yet found a replacement for her APS physician, who wrote her a 90-day prescription before the clinic closed. “If we can win at football we can fix this,” Graham told the news outlet. “That’s the way I feel.”

Pediatric psychologist Daniel S. Marullo, PhD, wrote in an op-ed, “Many individuals receive their care through nonprofit agencies and private practitioners in the community. Many of these providers have long waiting lists and are burdened by Medicare, Medicaid, and insurance reimbursements that are too low to sustain a practice … The closure (of APS) is both a personal tragedy for these patients and practitioners, but also taxes an already overwhelmed mental health delivery system.”

Eating disorder specialist Dr Nicole Seigfried told the Birmingham Business Journal that federal parity laws—which are supposed to ensure that mental health receives coverage equal to diseases like diabetes—were not working as promised. She said she had been blocked from some plans and feared things world get worse.

In a statement, BCBS of Alabama attributed the changes to the Affordable Care Act and a long-term transition from a capitated model to a fee-for-service model, and said providers had to change. “The ever-increasing demand for higher quality healthcare at lower costs have affected healthcare providers and insurers. In order to succeed going forward, many providers and insurers are having to adapt their business models."

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