A. Introduction: What is the Arizona Public
Behavioral Health System?

Arizona's public behavioral health system is comprised of several key components. These include:

  1. A set of state agencies with various responsibilities and levels of funding for behavioral health services. These include:

    ~ Arizona Department of Health Services, the umbrella agency for many human services functions;

    ~ The Behavioral Health Services Division, with line management responsibility for inpatient and community behavioral health services for adults and children;

    ~ Arizona Health Care Cost Containment Services (AHCCCS), the single state agency for Medicaid in Arizona, and the manager of the state's Medicaid managed care program for primary health care;

    ~ Arizona Department of Economic Security;

    ~ Administrative Office of the Courts;

    ~ Arizona Department of Juvenile Corrections.

  2. Arizona State Hospital has 308 licensed beds, 16 of which are reserved for adolescents. Arizona State Hospital accepts adult and adolescent commitments from the entire state, although utilization varies considerably from region to region.2 Arizona State Hospital also serves as the host facility for adjudicated sex offenders.

  3. Five Regional Behavioral Health Authorities (RBHAs) manage virtually all public funds allocated for community-based behavioral health services in Arizona and serve as the single point of authority for all citizens meeting clinical and financial eligibility criteria for public behavioral health services. RBHAs employ a variety of direct service staff models and contract providers to provide a range of community services. The RBHAs also provide or contract for local inpatient services, both in Psychiatric Health Facilities (PHFs) and private general or psychiatric hospitals.

  4. Numerous private organizations and individuals provide behavioral health services to individuals and families within Arizona. These include private general hospitals, private psychiatric hospitals, provider organizations (many of who contract with RBHAs to manage and deliver behavioral health services), and individual practitioners and professionals.

  5. An array of non-behavioral health services and benefit organizations that have a direct bearing on individuals and families needing behavioral health services. These include primary health care providers and payers such as HMOs, insurance companies, and private physicians. It also includes housing authorities and vocational and educational service providers.

Public behavioral health funds for public behavioral health services derive from two basic sources, the state/federal Medicaid program and state general fund appropriations for non-Medicaid eligible individuals. The current annual expenditures for the public behavioral health system is $248,552,676 with 46 percent derived from Medicaid payments (including the state's share of Medicaid).


The majority of individuals receiving services through the RBHAs have diagnoses of serious mental illness, although a few indigent individuals with less severe mental illness are served as well. Last year approximately 42,300 Medicaid eligible enrolled individuals received services. As depicted in Percentage of Medicaid Eligible Persons Receiving Services by Program Indicator chart, approximately 25 percent of these persons were adults with serious mental illness and 10 percent were persons with primary substance abuse treatment needs.3 Notably, 43 percent of all Medicaid enrolled individuals receiving services were children, while 25 percent were adults with serious mental illness. As depicted in Percentage of Non-Medicaid Eligible Persons Receiving Services by Program Indicator chart, for non-Medicaid eligible persons, approximately 38 percent of the average monthly users were adults with serious mental illness, and 42 percent were persons with substance abuse treatment needs.4

B. Perceptions and Realities-Establishing
the Facts of the Arizona Public
Behavioral Health System

As with all state behavioral health systems, the Arizona system is complex and comprised of a variety of formal and informal systems. In addition, although there is a considerable body of written policies, procedures, program and clinical guidelines, etc., much of the actual business of the system is carried out according to local traditions, beliefs, and perceptions. It is clear that some of these have powerful effects on the culture and therefore actions of the public behavioral health system in Arizona. Thus, before discussing specific strengths and needs of the system, it is important to try to objectify several of these perceptions.

Are these perceptions true reflections of the Arizona system, or are they traditions that have grown up without careful analysis of the facts?


Perception # 1: Arizona operates an advanced managed care model of public behavioral health.

Reality: Partially true

Because of Arizona's late start in participating in Medicaid, it is the only state in the United States to have begun its Medicaid behavioral health program as a capitated managed care system. RBHAs receive Medicaid funds in the form of per-member-per-month (PMPM) payments. State general fund appropriations and federal block grant funds are distributed to the RBHAs on a block grant (1/12th payment per month) basis. The Medicaid PMPM payments comprise approximately 45 percent of expenditures on a statewide basis, with 55 percent of the expenditures attributable to state general revenue funds.

The implementation of a full risk managed care system for public behavioral health has provided substantial benefits for Arizona. Many of the problems of traditional fee-for-service systems have only slightly been encountered in Arizona. These problems include incentives for over utilization, pressures to increase rates or unit prices, and incentives to over-enroll individuals without regard to the degree of service needed. However, risk-based managed care systems also have potential problems. These include incentives to under-serve and under-enroll high-risk individuals, enroll easier to serve individuals, and short-change service quality to achieve reduced service costs. Arizona uses risk-sharing arrangements to mitigate the potential negative effects of capitation.

Because Arizona implemented its Medicaid managed behavioral health service system without widespread and long term operations under a fee-for-service system, historical fee-for-service system utilization patterns and costs from which PMPM capitation rates could be accurately calculated were relatively unavailable. Further, there are no baseline measures of penetration rates5 or utilization patterns that could be used to gauge whether the potential problems of under-enrollment and under-serving are actually occurring. Arizona's penetration rates for adults and children are very close to the one comparison state where comparable penetration data were available. Thus, overall access to Mental Health and Substance Abuse services for Medicaid eligible persons in Arizona appears consistent with another comparison state operating in a managed care environment.

Arizona's Medicaid 1115 waiver is quite comprehensive and could support numerous flexible strategies for modern managed systems of care. In addition, Arizona's structure and financing for behavioral health services have important characteristics of managed systems of care. The capitation payment model, paid as per member per month (PMPM) allotments to RBHAs, is a well established managed care model. However, as noted above, there were limited historical fee-for-service utilization patterns or costs on which to base the PMPM rates. Thus, it is difficult to evaluate whether the PMPM rates provide correct incentives to be efficient, while at the same time assuring access to high quality and cost effective services.

The combination of the 1115 waiver and the implementation of capitation payments to RBHAs has not consistently had the effect of stimulating flexible and individualized services in the same ways as have occurred in other jurisdictions.

The Medicaid taxonomy6 permits delivery of a flexible array of services, but it does not appear that most RBHAs are taking advantage of that flexibility. In fact, the taxonomy does not include service definitions reflecting community support and rehabilitation models for adults, or wraparound, family focused services for children and their families. Thus, although the system provides for flexibility, the taxonomy tends to drive service provision towards traditional models of care. In addition, a historically inconsistent application of levels of care, service access and continuing stay criteria was reported throughout the system. Further, prospective and concurrent utilization review, quality management reviews of over and under-utilization, and similar practices that are common to managed systems of care were reported to be in development and not fully implemented. The Arizona Level of Functioning Assessment (ALFA), which promises to be an effective and reliable instrument and criteria for level of function assessment, has only recently been consistently administered and has not yet been fully utilized for quality improvement and best practice implementation.

The combination of the lack of historical and baseline data, the traditional service definitions in the taxonomy, and the as yet incomplete application of utilization management criteria and practices makes it difficult to assess whether all resources are spent effectively with respect to consumer need. Nor is there an empirical basis for calculating what funds, if any, could be re-deployed within the system for high priority recovery-oriented and family support type services.

Thus, Arizona operates the structure and financing elements of a managed system of care under its waiver and capitation payment process. However, these structural elements have not been implemented to full advantage. At the point of service delivery, at the point of management of service utilization, and at the point of making best use of data to manage the system of care, there remain many opportunities for improvements. As will be reinforced throughout this report, now that the basic structure and financing mechanisms are in place, it is time to focus on the content of the public behavioral health system in Arizona.


Perception # 2: The Arizona public behavioral health system is adequately funded.

Reality: Not true

Based on Fiscal Year 1997 data, Arizona's state mental health authority spent $66.48 per capita for behavioral health services for adults and children.7 This per capita funding level ranks 17th among the 51 state and territory jurisdictions reporting for that time period. However, Arizona is somewhat unusual in that all public dollars, including Medicaid, are spent and reported through the state behavioral health authority. In most states, providers and/or local authorities bill Medicaid directly, and this revenue is added to state and block allocations at the local/ provider level.

For example, in Arizona only one percent of Medicaid behavioral health dollars are earned and spent outside the DBHS/RBHA system. In Iowa, 83 percent of Medicaid funds are earned and spent outside the purview of the state behavioral health authority. These Medicaid funds contribute to the overall value of public behavioral health system but are counted in a different way. For Arizona, when outside Medicaid funds are added, the national ranking goes from 17th to 21st among the 42 states reporting this information. For Iowa, when outside Medicaid funds are added, the ranking goes from 41st to 11th. The conclusion of this analysis is that when all public dollars are counted, Arizona is right in the middle of the pack in terms of public per capita funding.

On a comparative basis, Arizona shows low Medicaid PMPM expenditures for 24-hour (inpatient and residential treatment) Mental Health/Substance Abuse services for both children (under age 18) and adults (age 18+). For children, the PMPM rate of $4.71 is less than half of the next lowest comparison state at $10.76. Further, the Arizona rate is less than 25 percent of the highest comparison state. For adults, Arizona's 24-hour rate at $2.58 is even lower in comparison to the other "benchmark" states. The Arizona rate is less than one-third of the next lowest comparison state at $10.46 and is less than 10 percent of the highest comparison state. It should be noted that 24-hour care costs in state-operated facilities for adults aged 22 to 64 (i.e., Institute for Mental Disease-IMD-costs) are omitted from all of the states' data.

Arizona's cost per user per month for children of $398 is about one-third of the one comparison state with comparable data.8 Thus, the level of expenditures on a per user basis appears low relative to the other comparison state. This finding is most likely due to Arizona's low use of 24-hour services.

Arizona's cost per user per month for adults of about $342 is almost two-thirds of the comparison state. Again, the differential is most likely due to Arizona's low use of 24-hour services. The differential for adults versus children within Arizona is driven primarily by the fact that Arizona's PMPM expenditure for adults for other than 24-hour care services is high relative to the comparison states. At the same time, the PMPM rate in Arizona for children for other than 24-hour services is about average relative to the comparison states.

The conclusion of this analysis is that when all public dollars are counted, Arizona is right in the middle of the pack in terms of public per capita funding.

It is fair to say two things about public behavioral health systems throughout the United States.

First, virtually all are under-funded and have insufficient resources to meet the priority service needs of their consumers. Thus, the fact that Arizona is ranked about in the middle of all states on the basis of per capita funding really means that Arizona is more under-funded than half the states and less under-funded than the other half of the states.

Second, although virtually all public behavioral health jurisdictions are under-funded, they also have resources tied up in services, facilities, staffing, or other components inefficiently and could be doing better with the money they already have. In Arizona, many concrete and measurable service improvements could be implemented without new money. A number of these are discussed in the Recommendations section of the report. Nonetheless, if all these improvements were implemented, Arizona would still have major gaps in services and would still have many needy individuals who would not be able to have their needs met in a timely fashion. Thus, no-cost service system improvements are not a substitute for the substantial additional funding needed to meet consumer and family needs in the Arizona public behavioral health system.


Perception # 3: The Arizona public behavioral health system serves far fewer individuals with behavioral health needs than live in Arizona (prevalence vs. penetration).

Reality: True

The following table details the estimated prevalence9 of various mental health disabilities for Arizona.


Prevalence Rate

Arizona Estimate
of Prevalence
(based on 1990 census data)




Bi-Polar Disorder



Major Depression



Personality Disorder



Total Severely Mentally Ill



Non-Severely Mentally Ill



Based on these estimates approximately 197,922 persons will meet Arizona's diagnostic and functional criteria for SMI. Currently, Arizona serves approximately 23,00010 adult SMI individuals per year, or 11.6 percent of the estimated demand population. It is not known at this time whether or where the remaining 174,922 individuals receive behavioral health care in Arizona. Some proportion is likely to be receiving care in the private behavioral health care sector. And, some proportion are likely to receive necessary medications from primary care physicians, and to receive supports in the community from family members. Unfortunately, some unconnected individuals may also become the responsibility of the criminal justice system and/or the homeless service system.

The large proportion of individuals estimated to suffer from mental illness in any year who are not connected to the public behavioral health system underscores the importance of forging effective linkages with the primary health care sector. Primary care physicians treating individuals with serious mental illness could benefit from both expertise and support from the public behavioral health system. The same is true for other agencies in the community, which find themselves in caregiver roles without the necessary knowledge or access to behavioral health services and supports. In combination with the analysis of the relative inadequacy of Arizona public behavioral health spending levels under perception # 2 above, the large proportion of unconnected individuals points to a substantial need for additional funding for the Arizona public behavioral health system.


Perception # 4: There is a disparity of resources among RBHA service areas within Arizona.

Reality: True

As depicted in FY97 Expenditures Per Capita Across all Payer Sources by Service Type & RBHA graph, there are marked differences among per capita expenditures throughout Arizona. Unexpectedly, PGBHA has the highest over-all per capita expenditures. Maricopa County is close behind. At the far other end of the per capita funding levels is Excel, in last place, preceded by NARBHA, in second to last place. These latter two are the most rural of the RBHA service areas. However, being rural areas does not necessarily mean that fewer per capita resources are needed. Actually, between fixed costs, poor economies of scale and travel distances, one would expect rural per capita expenditures to be slightly higher than those for urbanized areas. The low PMPM rates for certain rural areas may be based on historical low penetration rates and low utilization patterns, not on the underlying costs of delivery services.

In the context of significant variances in per capita funding levels, there are also substantial variations in regional penetration rates. As demonstrated in FY97 Penetration Rates by Population Type, Percentage of Enrolled Consumers Receiving Service out of Total Eligible Consumers graph, there are substantial variations in penetration rates but these are not necessarily correlated with per capita funding levels. For example, in the Excel Group area the penetration rates are low, corresponding with low per capita funding levels. However, in the PGBHA area the penetration rates are low as well, even though the per capita funding levels are highest in the state. In the NARBHA region, per capita funding levels are low, but penetration rates are not as low as some other areas.

The variations in both per capita funding levels and penetration rates may be historical, idiosyncratic or explained by bona fide variations in consumer needs and service demands. Absent clear alternative explanations, they are indicators of important variations in service access among the behavioral health regions in Arizona.


Perception # 5: Arizona uses very little inpatient service as opposed to community-based care.

Reality: True

Arizona has a reputation for spending a high proportion of public behavioral health dollars on outpatient, community- based services as opposed to inpatient psychiatric hospital services. The proportion of outpatient versus inpatient service expenditures has been traditionally used as a global approximation of positive improvements in public behavioral health systems. When dollars flow from inpatient settings to community-based settings, the system is assumed to be making progress in the right direction.

When looking at Arizona State Hospital expenditures, Arizona looks favorable compared to most other states. In fact, Arizona spends a lower percentage of total public behavioral health dollars on state hospital services than all other states (8.2 percent compared with the national average of 45.9 percent).11 However, this figure does not include spending on PHFs, private general and psychiatric hospitals.

Arizona claims data for the past few years show that inpatient expenditures are consistently low for both Medicaid and non-Medicaid populations.

However, there are variances in utilization of inpatient days for people with severe mental illness throughout the state across all payer sources, as depicted in the FY98 Acute Days Per 1,000 SMI Population by RBHA & Facility Type graph. It is also apparent that there is widespread use of PHFs for acute care needs across the state. This leads to the conclusion that most adults needing inpatient services are receiving these services close to home, and that the state hospital is not being inappropriately used for routine acute inpatient care.

Therefore, it is safe to conclude that Arizona does not over-rely on or over use inpatient beds as opposed to community resources. In fact, while there are variances from RBHA to RBHA, Arizona appears to have among the lowest hospital bed day utilization patterns in the United States. This should be taken as a measure of positive practice in the Arizona public behavioral health system.

However, it should also stimulate further analysis, particularly when viewed in the light of the low proportion of adults predicted to need services compared to those who receive services. Is there enough capacity for public sector inpatient care? Where are people going for acute inpatient services if not to state-funded facilities? Is there a correlation between low hospital use, low penetration rates, and the publicly identified problem of providing behavioral health services in jails and prisons?


Perception # 6. Primary health care and behavioral health care are not well integrated in Arizona.

Reality: True

As Arizona has chosen to "carve-out" or separate the provision of mental health care for AHCCCS beneficiaries from their physical health care, there remains a fundamental question as to how these two distinct and important elements of an individual's emotional and physical well being can best be coordinated. At the time of the on-site portion of this study12 this issue of integration of primary health care and public behavioral health care was on the top of many individuals' lists of issues to be addressed. This was primarily because of the logistical problems at that time of prescribing and managing access to psychotropic medications. Under the system in place at that time, primary care physicians were required to refer patients to the public behavioral health system for prescription of psychotropic medication by psychiatrists in that system. This often resulted in long delays while referred individuals went through the intake process and waited for an appointment with a psychiatrist in one of the RBHAs. That issue is reported to be in the first stages of resolution, with the implementation of a primary care prescriber model, which should benefit many consumers and families as well as facilitating the medical practice of primary care physicians.

This progress is positive, but it does not affect many other issues related to primary health and behavioral health integration in Arizona. During the on-site information collection activity, virtually all respondents, including consumers, family members, providers, RBHA management and private primary care physicians identified problems of access, coordination and communication between the primary health care system and the public behavioral health system. Specific problems from both sides included:

~ Long wait times to gain access to a primary care physician and/or a psychiatrist;

~ Lack of understanding among participants of the "rules" of each system: how decisions are made, who communicates with whom, who pays for what, who is eligible for what, etc.;

~ Poor communication between treating caregivers;

~ Lack of supply of primary care physicians and psychiatrists;

~ Lack of formal structures, functions and incentives to coordinate and integrate care.

In those states where the carve-out13 model of managed behavioral health care is used, problems of integrating and integrating primary health care with behavioral health care are often encountered. Some states, such as Pennsylvania, have implemented formal regulatory and contractual requirements that establish formal mechanisms for primary health and behavioral health integration both in planning and operations, and in physician-to-physician communication at the point of service. In Arizona, several informal local efforts to integrate primary and behavioral health have been initiated, but these have not resulted in systematic improvements.

Although some improvements have recently been achieved, the primary health care system and the public behavioral health system are not well integrated in Arizona. This is the subject of one of the major recommendations of this report.

C. Strengths of the Arizona Public
Behavioral Health System

The findings and recommendations included in this report ultimately focus on issues and gaps that should be addressed if Arizona is to move toward the best practices goal for adults and children with behavioral health issues. At the same time, conducting a strengths-based assessment has been the appropriate focus, as many strengths and positive service delivery models have been identified. The intent was to find and to document a foundation on which the improvements in the system could be built. That intent has been satisfied.

The 10 most promising aspects of the Arizona public
behavioral health system identified in this study are:

  1. Structure for Managed Care - Arizona has developed a managed care structure, based on the carve-out model. Although the carve-out model engenders issues with regard to primary health care integration, it is currently preferable in jurisdictions in which Medicaid is a primary funder of the public behavioral health system. While the system may evolve towards an integrated "carve-in" approach, it will accomplish that from a position in which the system of behavioral health services is well established and well managed. The current structure supports the use of managed care principles and technologies, including utilization management, information management, outcome measurement and quality assurance.

  2. Risk-Based Financing - Risk-based financing is being used in Arizona to create incentives and push the system toward appropriate utilization and cost control. Risk based financing, with appropriate risk sharing arrangements such as those used in Arizona, provide the most positive incentives to manage care effectively and efficiently. Risk sharing reduces incentives for over or under utilization and provides flexibility to local managers on the design and implementation of public behavioral health services.

  3. Local Systems of Care - The behavioral health carve-out has been implemented in a manner that emphasizes local systems of care, and in which financial, clinical, and administrative authority are consolidated in the agencies managing the local systems of care. The RBHAs exemplify the concept of local authorities, which have both the authority and the control of resources necessary to implement systems of care that best meet local conditions, needs, and resources. The five RBHAs in Arizona have different organizational and service delivery models, and have flexibility to arrange service delivery tailored to local needs.

  4. Strong Clinical Leadership - There is evidence of strong and forward-thinking clinical leadership at the top of Arizona's public mental health system. Many of the clinical protocols and guidelines emanating from the Arizona Division of Behavioral Health Services are examples of evidence-based best practice, and provide a good foundation for implementing such best practices in the field.

  5. Examples of Innovation and Best Practice - Pockets of cutting-edge best practices have been identified in Arizona, and these could be replicated more widely throughout the state as part of the strategy to improve the system. Many of these are used as examples as specific best practice approaches are discussed in Section III of this report.

  6. Strong Data Collection - There is relatively good and consistent data collected throughout Arizona's public mental health system, and the management information systems are on a path to becoming even better. Consistent, timely and accurate data that can be used for accountability, planning, quality improvement, and system management are essential to a high quality managed system of care. Arizona's data collection and reporting system will have the capability to support these functions, particularly if data analysis and data exchange between the state and the RBHAs are improved.

  7. A Focus on Those with Serious and Persistent Mental Illness - The system of care for adults in Arizona is appropriately focused on individuals with serious mental illness. This is partly a result of the state's efforts to comply with the Arnold v. Sarn stipulation and order. It also reflects a firm and long-standing commitment on the part of state and local behavioral health system leadership to individuals with serious mental Illness.

  8. Strong Cultural Competency - Successful efforts to attain cultural competence have been implemented in many different ways throughout the system. Arizona is a culturally and linguistically diverse state. Its successes in tailoring service components and delivery approaches to culturally and linguistically diverse individuals, when implemented more consistently statewide, will be a model for the rest of the country.

  9. Models of Rural Service Delivery - There is a strong commitment to providing good public behavioral health services in rural areas of Arizona. Rural strategies such as telemedicine and paraprofessional behavioral coaching are good models for serving diverse populations in large rural areas, and could be replicated throughout other rural areas of Arizona and in other rural jurisdictions.

  10. A Record of Research and Demonstration - Arizona has as history of conducting demonstration projects aimed at improving behavioral health services. Several demonstration grants, such as the consensus panel activity related to co-occurring mental illness and substance abuse, show promise in terms of developing and replicating best practice in Arizona.

The Environment for Change in Arizona

In general, the citizens of Arizona believe strongly in self-reliance and self-sufficiency. The fundamental attitude is that people must "pick themselves up by their bootstraps" as opposed to receiving "handouts" from a public welfare or social service system. Arizona is also a fiscally conservative state. Based in part on these public attitudes and approaches, Arizona is a relative newcomer to the funding and management of Medicaid covered behavioral health services, having begun implementation in 1990.

The Arizona public policy context presents some benefits for both people with behavioral disabilities and for public administrators and taxpayers. For example, self-sufficiency and self-reliance are key elements of the recovery process. Further, the relative newness of the Arizona system in terms of Medicaid coverage for behavioral health services means there are fewer traditional programs and service delivery systems, and fewer special interests, to generate resistance to a positive change process. However, it also results in an environment that could stifle progress or increase the difficulty of implementation of positive new initiatives.

There are three factors that affect the ability of the system to meet the needs and choices of priority consumers. All of these are present to various degrees in other states, and most states struggle with these issues as they attempt to move towards best practice models of behavioral health services. They are discussed here because confronting these issues is critical to long term improvements in the Arizona public behavioral health system. Further, state behavioral health systems that have moved further along towards a best practice model of behavioral health services have proven that these issues and barriers can be overcome. These factors are:

  1. In Arizona as in other states there is a widespread lack of public education and understanding about mental illness, emotional disturbance and substance abuse. This results in stigmatization of individuals with mental illness, emotional disturbance or substance abuse, which in turn makes the development and operation of integrated community services more difficult for both providers and consumers. In addition, public misunderstandings about behavioral health disabilities lead to a general unwillingness to add funds to the public behavioral health system.

  2. Arizona and many other states do not exhibit a clear consensus on behavioral health service system priorities. There are numerous examples of organizational turf and resource battles between and among state administrative agencies. There also are continuing political and resource differences between the urban and rural sections of the state, and continued dissonance among consumers, families, and other stakeholders about priorities for changing and improving the public behavioral health system. Examples of the consequences of this lack of priorities and implementation strategies include: (a) the failure of consumer organizations to sustain growth and develop legitimacy; (b) the development of plans to capitalize a replacement for Arizona State Hospital (ASH) without corollary planning for improvements to the community behavioral health system; and (c) several issues related to the integration of behavioral health and primary health care services remain unresolved.

  3. Arizona has a number of characteristics that exacerbate the universal difficulties of developing and managing public behavioral health services. Arizona has vast, sparsely populated and geographically isolated rural areas in which the delivery of responsive community mental health services is difficult. This problem is compounded by the lack of any viable affordable transportation services in rural areas. Arizona is also an unusually diverse state, with large numbers and proportions of Spanish-speaking Mexican American residents and Native American residents. Finally, Arizona is a fast growing state, and many of the new residents are retirees, some of whom need or will need specialized behavioral health services.

Conclusion: What is the True State of the
Arizona Public Behavioral Health System?

This report starts by posing a question: What is the true state of the Arizona public behavioral health system? Is the Arizona public behavioral health system a cutting edge managed system of care or is it a system in need of repair? The answer, inevitably, is somewhere in the middle. There are pockets of excellent programs in Arizona, and some statewide policy initiatives that are being implemented in a manner consistent with evidence-based best practice. There are also some significant gaps in the Arizona public behavioral health system-gaps that will take years of effort and substantial resources to correct. As with many other states, there is a significant gap between stated policy and practice at the state level versus actual practice at the point of service delivery.

One problem encountered in this study is a general perception that little or no improvement can be made in the Arizona public behavioral health system unless new resources are appropriated. This report documents that, to the contrary, there are numerous opportunities in the Arizona public behavioral health system to make significant improvements without new resources. Yes, the over-all public behavioral health system in Arizona needs more money. But no, the absence of new resources should not be erected as a barrier to implementing positive changes that will have a substantial impact on the quality and effectiveness of services delivered to priority consumers.

This becomes the thrust of the recommendations of this report. Strategies can and should be implemented at the state, regional, and local levels that (a) take advantage of evidence-based best practice relevant to the current system in Arizona; and (b) make better use of existing resources to deliver efficient and effective services to people with the greatest needs. New resources should be added over time but should be used to enhance already proven preferred practice service delivery and service management models, not to just do more of the same.

2 See Percentage of Medicaid Eligible Persons Receiving Services by Program Indicator and Percent of Non-Medicaid Eligible Persons Receiving Service by Program Indicator charts.

3 Based on available data, it was possible to approximate unduplicated number of persons served within payer sources but not across payer sources. Calculating the percentage of total enrolled Medicaid clients receiving services that were reported as seriously mentally ill and persons with substance abuse treatment needs determined this respectively. Data is based on information provided by the Division of Behavioral Health Services.

4 Calculating the percentage of average monthly-enrolled non-Medicaid clients receiving services that were reported as seriously mentally ill and persons with substance abuse treatment needs determined this respectively. Data is based on information provided by the Division of Behavioral Health Services.

5 Penetration rates refer to the proportion of total eligible or enrolled individuals actually accessing services from the system. Penetration rates are typically used as a measure of the degree to which the system is reaching out to and serving the number of individuals and families that are likely to need services at any one time. For example, in the Medicaid program it is generally expected that a minimum of 10 percent of all Medicaid enrollees will access behavioral health services in the course of a year.

6 Taxonomy refers to the list of specific service types and service codes that are permissible to be delivered and paid for under the managed system of care. The taxonomy is important because it defines the parameters of what services will be offered to consumers, and also guides professional staff in their decision-making about which services are appropriate for individual consumers.

7 Funding Sources and Expenditures of State Mental Health Agencies: Fiscal Year 1997. NASMHPD Research Institute. Data from the Arizona Division of Behavioral Health Services differed by a very small margin, resulting in a per capita expenditure amount of $67.81. This amount is referenced later when comparing RBHA expenditures per capita.

8 Member months are the number of persons enrolled multiplied by the number of months eligible for services. User months indicate the number of months an enrolled member is receiving services.

10 Number supplied by the Arizona Division of Behavioral Health Services.

11 Funding Sources and Expenditures of State Mental Health Agencies: Fiscal Year 1997. NASMHPD Research Institute.

12 Spring, 1999

13 Carve-out refers to establishment of funding and service delivery structures for behavioral health services that are separate and distinct from the funding and delivery system for primary health care.

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Last year approximately 42,300 Medicaid eligible enrolled individuals received services.

The conclusion of this analysis is that when all public dollars are counted, Arizona is right in the middle of the pack in terms of public per capita funding.

What is the true state of the Arizona public behavioral health system? Is the Arizona public behavioral health system a cutting edge managed system of care or is it a system in need of repair? The answer, inevitably, is somewhere in the middle.