The Jindal administration won’t renew a contract with Magellan of Louisiana to coordinate services for poor residents with mental health and addictive disorder problems.

Instead of the one company caring for Medicaid patients’ maladies, such as drug addiction, schizophrenia and other behavioral problems, the care will be covered by the five private insurance companies the state pays to manage the medical care of more than 920,000 Medicaid patients, state health chief Kathy Kliebert said Thursday.

Magellan has been the subject of two scathing legislative audit reports for its failure to meet some contract requirements. Health officials came under intense questioning by legislators Thursday about what was being done to fix problems that led to reduced services and budget problems at five state entities serving behavioral health clients.

The move will be gradual over the next year, and Magellan will remain on contract while transition plans are developed and contract terms worked out with the five Bayou Health insurance companies. The integration of services is expected to be complete by Dec. 1, 2015, under administration plans.

“During the transition period between now and Magellan going away, what are you going to do to improve the system we have?” asked state Sen. Ben Nevers, D-Bogalusa.

“We know we have got to get more care into the community for people,” Kliebert said. She assured that problems, mostly involving a computer glitch not sending out bills properly, cited in the legislative audits were being addressed.

Kliebert, the secretary for the state Department of Health and Hospitals, said the administration wanted to move toward private insurance companies handling the care for behavioral disorders for the state’s low-income and uninsured residents.

“There’s always been discussion at some point we would do this,” Kliebert said, adding that physical illnesses and mental issues should be treated as one because one impacts the other.

Kliebert said the move is unrelated to the audit’s criticism. Magellan more than doubled the number of providers of behavioral health services from 800 to 1,700 and increased the number of inpatient treatment beds by 87 percent, she said.

“We set a good framework,” Kliebert said. But, she said, “Magellan could not get us to the next step because it is not an acute managed-care provider.”

The state Department of Health and Hospitals earlier this month announced the award of contracts to five insurance companies. The companies will be paid a “capitated” rate, like an insurance premium, to provide health care for some two-thirds of the state’s 1.4 million Medicaid recipients. Terms of those contracts, which go into effect early next year, are being negotiated.

DHH Chief of Staff Calder Lynch said the Magellan contract extension will provide time for behavioral health providers, mental health advocates, local government entities and state agencies. An advisory group will be named in the next few weeks, he said.

The contracts with the insurance companies will be updated to increase the premiums the state will pay because of the expanded services they will cover, Lynch said. Those financial details have not yet been worked out, he said.

With the set rate, Kliebert said there is a strong financial incentive for health plans to provide services to people in the community instead of costly institutions, hospitals and in-patient residential facilities.

Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/

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