Carole Matyas says Value Options is not about to abandon NorthSTAR.
Carole Matyas says Value Options is not about to abandon NorthSTAR.
Mark Graham

Rising STAR

When the state of Texas in July 1999 unveiled NorthSTAR, an experimental project in which two managed-care companies were hired to deliver health care to indigent mentally ill and chemically dependent people living in Dallas and six surrounding counties, its critics feared the worst: Because of a historical lack of state funding, the profit-driven companies would cut care and, as a result, a new wave of forsaken patients would wash up on the streets, in jails, or worse, at the morgue.

Despite 20 months of painful adjustments and bitter wrangling that continue to cloud the project's implementation, the worst hasn't happened. Although it is still too early to effectively evaluate the quality of care being delivered under the project, it has yielded one piece of promising news: NorthSTAR could work. The question now is, are state lawmakers committed to their philosophy enough to fork over the estimated $6 million a year NorthSTAR managers say they now need to make the program viable?

"We feel strongly that the legislators need to understand NorthSTAR is underfunded," says Carole Matyas, who manages the NorthSTAR program for Value Options, one of the two companies chosen as the plan's health-care providers.

NorthSTAR, one of several managed Medicaid projects currently being tested throughout Texas, is a part of the state's trendy philosophy that privately owned companies, when allowed to compete for the state's health-care dollar, can more efficiently deliver health-care services than the county-run agencies and social-service organizations that have traditionally cared for the poor.

Not only could the companies, Value Options and Magellan, provide a new "continuum of care" by easing access into the system and giving patients, like employees in the private sector, the right to choose their doctors, it was promised, but also they could increase the number of people treated. To many, the plan sounded too grand to be true, particularly considering that Texas ranks seventh worst in the nation in terms of mental health-care spending.

As state lawmakers now begin the process of hammering out the state's two-year budget, Matyas and officials from the Texas Department of Mental Health and Mental Retardation, which regulates the project, are hoping to persuade the politicians that their project is succeeding and is worthy of additional funding--a difficult task in a year when no state departments are expected to get the level of funding they want. To make matters worse, Matyas is now having to fend off NorthSTAR critics, who point to several recent failures as evidence that the controversial experiment is on the verge of collapsing.

In June, for example, Magellan announced that it was bailing out of the project, thanks in part to medication costs that spiraled some 200 percent over budget and made it impossible for the Georgia-based company to realize profit. Although the state is searching for a new company to take Magellan's place, so far none has expressed interest.

Another blow came in January, when Value Options told the state it needed $10 million in emergency funds to offset losses it has incurred since the program's beginning. The request, Matyas says, is being wrongly interpreted as a threat that the company will follow Magellan's lead unless new money is made available for the project.

"There is rumor out there that Value Options is just waiting to give notice to the state to terminate its contract. That's not true," Matyas says. "We have no desire to terminate our contract with the state."

But Matyas' words aren't reassuring everyone. In the coming weeks, the Dallas Area NorthSTAR Authority or DANSA, a local committee created to provide oversight to the project on behalf of its patients, will hold a series of public meetings to discuss what the state should do in the event that Value Options abandons the project--a move that could effectively bring the experiment to an end given the absence of corporations willing to take Magellan's place, says Tom Turnage, DANSA's executive director.

"There are some who want to go back to the old way," says Turnage, who spends much of his time acting as a sounding board for complaints from NorthSTAR consumers and health-care providers. "DANSA's goal is to develop one or two proposals in the event that Value Options pulls out. Then we can present those to the state as 'these are what the community wants.'"

All that won't be necessary, says Matyas. In response to the company's emergency funding request, TDMHMR officials negotiated several changes with the company that are designed to recoup Value Options' losses without scaling back on care. Primarily, the company is limiting enrollment in the project by reducing the number of places where new patients can enroll and more closely screening patients' income level to ensure they are truly qualified for the program.

"We're just looking a little more closely at who gets enrolled," Matyas says. "We have had abuses in the system where people have been enrolled that don't qualify. We are not eliminating enrollment for qualified folks."

While the company has not cut the services it provides clients, Matyas says, it has been forced to cut the rates it has been paying some providers, most notably Dallas Metrocare Services, Inc., formerly known as the Dallas County's Mental Health and Mental Retardation department. As part of the cut, which tallied $1.5 million, DMS was forced to cut its medication management program, turning away some 4,000 patients. Those patients, Matyas says, are currently being absorbed by Value Options' other providers.

Despite the "adjustments," NorthSTAR supporters say there are several strong indications that the project is fundamentally working. Most notably, the project has, as promised, increased the number of people receiving care, according to numbers the state has collected. Second, and perhaps most important, NorthSTAR clients generally appear to be happy with the quality of care they are getting, according to Turnage.

Unlike the old system where patients were assigned a doctor, NorthSTAR patients now can select a primary care physician from Value Options' list of providers. And, once they are enrolled, they can continue to get care even if they bounce on and off the Medicaid rolls--a situation that often disrupted care in the past.

Although some patients are complaining that the listed doctors they had chosen told them they were no longer accepting NorthSTAR patients, reflecting a troubling decrease in the number of available providers, Turnage says, there has not been a corresponding spike in the overall number of customer complaints that one would expect if there were serious problems with the program.

Instead, the most frequent complaints have come from the providers, who complain that tight resources are forcing them to curb care. Most often, the complaints involve drug treatment centers whose operators say Value Options has forced them to significantly cut back on the lengths of the stay for inpatient and outpatient drug treatment programs. The cutbacks have forced some centers, most notably the New Place in East Dallas, to shut their doors ("Quick Fix," October 28, 1999).

Increasingly, Turnage says, the debate is raising ethical questions about levels of treatment.

"It gets to the debate, do you provide a little bit to everybody or do you provide enough to some of them?" Turnage says. To put it another way, he offers an anecdote about patients in need of antibiotics. "Should we give a 10-day supply to everybody until the money runs out, or do we give everybody a three-day supply and just hope that it takes care of the infection?"

The situation has forced some providers, such as Dallas MetroCare, to change its role as a caregiver that could ultimately have a negative impact on clients, says Jim Blagg, the company's chief executive officer and a frequent NorthSTAR critic.

"The clients have been shielded from what I consider to be some of the flaws in the program," says Blagg. "One, it doesn't have enough money in it. Secondly, I would rather not have a private company taking 14 percent off the top for administration and profit. I'd like to see the program restructured if, in fact, the state is going to keep it. I think the whole thing needs to be looked at."

In Austin, however, such complaints sound like sour grapes coming from providers who must now compete for the same tax dollars that they were previously given without question, says NorthSTAR point man Dave Wanser, the director of behavioral health services at TDMHMR.

"Having been to Dallas now 3,000 times in the last two years, everybody spends too much time talking about, 'What would happen if,'" says Wanser, who notes that there were administrative costs under the old system, too. "We would all just love to get a few million bucks, but that's not the only alternative we've got. This is a rationing issue. You try to find a balance between the resources and the demand. It's something we've all been committed to doing. It's a very difficult thing."

The real question is, Wanser says, are state lawmakers willing to bring NorthSTAR up to a level playing field in terms of mental-health funding in the state and, as a result, give the program a fighting chance at success? In Texas, there are 40 funding "regions" for mental health, and the NorthSTAR region ranks at number 35--fifth-lowest in the state, despite its burgeoning population. The additional money Wanser is asking for would, if granted, simply bring NorthSTAR up to the state's current average.

Unless state lawmakers are willing to provide some additional funding, Matyas says Value Options will have to consider further changes in the program and, in effect, the company will not be able to fulfill all the promises NorthSTAR's creators originally made.

"The state wants to purchase a program that is completely open and completely without barriers of any kind," Matyas says. "We are saying that perhaps the program the state purchased is too ambitious for the level of funding that has been allocated. If we don't get additional funding, then what programmatic adjustments is the state willing to make so that it can be [financially] stable?"

In other words, how many more cuts are state lawmakers willing to risk? At this point, Matyas doesn't want to speculate on how much those cuts would cost or where they would come from. "None of us," Matyas says, "would look forward to that."


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