County to Handle Medi-Cal Mental-Health Care Service : Management: It will create and administer a program for low-income patients. If it hadn’t acted, the state would have picked a private contractor for the job.

In an effort to help the state get a handle on rapidly rising Medi-Cal costs, the Board of Supervisors decided Tuesday to create and administer a managed care program for the county’s low-income mental health patients.

The Board of Supervisors agreed to notify the state Department of Mental Health that it wants to manage mental health care for the county’s approximately 285,000 Medi-Cal recipients, including care now provided by the private sector.

Under the new system, low-income people can still choose to obtain treatment from either private physicians or county clinics. But the county will receive a fixed amount of federal and state money per patient to pay for those services.

Tom Uram, director of the Orange County Health Care Agency, said ultimately the county may choose to drop from the program those physicians or hospitals whose services are deemed most expensive and least cost effective. Also, he said, the county will provide “case managers” who are expected to direct more poor mental health patients to receive care in physician offices rather than in more expensive psychiatric hospitals.

This move to more tightly manage mental health costs parallels the development of HMOs, or health maintenance organizations, for privately insured patients.

If the county had not agreed to revamp the mental health program for the county’s Medi-Cal patients, Uram said, the state would have found a private contractor to do the job.

Uram said the county will phase in the new mental health program for Medi-Cal mental health patients over four years.

As the first step, he said, the county in October will begin administering inpatient mental health services for Medi-Cal recipients at a projected cost of $17 million for the first year. “It is not without financial risks, but as long as the state is going to dictate managed care, we would as soon be in charge of our destiny,” Uram said.

Uram said the county’s administration of the mental health component of Medi-Cal will dovetail with OPTIMA, a county-administered HMO that will begin providing and funding other Medi-Cal services next year.