State Medicaid Program Usage of Managed Care. The Health Care Authority (HCA) administers the state Medicaid program, also called Apple Health, which provides medical care services to eligible low-income state residents and their families. Most covered individuals in Washington receive Apple Health services through managed care, an arrangement in which the state contracts with a private entity called a managed care organization (MCO) to provide prepaid medically necessary health services within the State Medicaid Plan(Plan) to enrolled individuals through a network of local providers contracted with the MCO. Managed care includes a comprehensive package of services including preventive, primary, and specialty care. Contracting MCOs are subject to network adequacy requirements which are ongoing and receive periodic review. 

Medicaid services are jointly funded by the state and federal government, and are administered by states according to the Plan. Services within the Plan are subject to negotiation between the state and the Center for Medicaid and Medicare Services (CMS), a federal agency which approves Medicaid services and Medicaid reimbursement rates that fall within Congressional authorization or waiver authority.

Managed Care Procurements. MCOs are selected through a competitive procurement process administered by HCA. The last procurement for the Medicaid program occurred in 2012, and resulted in the selection of four national health care companies, Molina Healthcare, Amerigroup, Coordinated Care, and UnitedHealthcare Community Plan, and one local nonprofit, the Community Health Plan of Washington. HCA is required to give several factors significant weight during the procurement process, including:

• demonstrated commitment and experience in serving low-income populations;
• serving persons who have mental illness, substance use disorders, or co-occurring disorders;
• partnering with county and municipal criminal justice systems, housing services, and other critical support services;
• recognition that meeting the physical and behavioral health care needs of enrollees is a shared responsibility;
• consideration of past and current performance and participation in other state or federal behavioral health programs as a contractor; and
• the ability to meet requirements established by HCA.

Inclusion of Behavioral Health in Fully-Integrated Care. Prior to 2016, physical health and behavioral health were procured separately. Instead of being managed by MCOs, behavioral health managed care services were provided by county-run Behavioral Health Organizations, which administered networks to serve individuals who could meet access to care standards, which required proof that the individual had a mental disorder that was either causing a temporary crisis or a long-term disabling condition. Between 2016 and 2020, services which had been provided by Behavioral Health Organizations were integrated into MCO networks and made available in a continuum of care addressing mild, moderate, and severe behavioral health treatment needs, with certain non-Medicaid services, including crisis care and services for individuals who do not qualify for Medicaid enrollment, held back for administration by behavioral health administrative services organizations, which may be county-run, or if declined by the county or counties in the service region, administered by a private entity contracted with HCA.

Provider Delegation Arrangement in King County. When integrated health care was adopted in the King County regional service area in 2019, instead of contracting with individual behavioral health agencies, the five MCOs each contracted with the county to provided a behavioral health managed care network administered by the King County Behavioral Health and Recovery Division, effectively continuing the former behavioral health organization structure. The behavioral health network administered by King County, which it refers to as the King County Integrated Care Network, combines behavioral health services funded by state MCO and behavioral health administrative services organization funding streams with local funding provided through the local option behavioral health sales tax, supplemented by other county general fund dollars and philanthropic funding.

Involuntary Treatment Act Work Group. The Involuntary Treatment Act Work Group (ITA Work Group) was established in 2020, to evaluate the effects of implementation of Chapter 302, Laws of 2020—2E2SSB 5720, and vulnerabilities in the crisis system.  Recommendations were submitted to the Governor and the Legislature in 2022.  The work group expired in 2022.

Current Medicaid Reprocurement. Last year HCA announced that it planned to reprocure Apple Health MCO contracts in 2023, with a targeted implementation date of January 1, 2025. According to sources within HCA, this effort has been postponed indefinitely while the agency focuses on unwinding increased medical assistance services provided during the public health emergency.

At least six months before releasing a Medicaid integrated managed care procurement, and no later than January 1, 2025, HCA must adopt statewide network adequacy standards for MCO behavioral health provider networks which are assessed on a regional basis, which ensure access to appropriate and timely behavioral health services, and address all behavioral health services covered in contract. HCA must establish a process for annual review of the network adequacy standards which allows for participation by counties and behavioral health providers, and a structure for monitoring compliance with these network adequacy standards. Factors for HCA's consideration are specified.

Before releasing a new Medicaid procurement, HCA must identify options that minimize provider administrative burdens, including the potential to limit the number of MCOs that operate in a regional service area.

HCA must give significant weight to additional factors in the MCO procurement process:

• the ability to provide for the crisis service needs of Medicaid enrollees;
• whether the MCO's approach to contracting simplifies billing and contracting burdens for behavioral health agencies in its network, such as by participating in the delegation arrangement in King County;
• demonstrated prior experience with providing a continuum of behavioral health services similar to Washington; and
• demonstrated commitment to use of alternative pricing and payment structures for behavioral health providers.

HCA must urge MCOs to establish, continue, or expand the existing provider delegation arrangement in King County, provided the arrangement meets integrated managed care contract requirements and National Committee for Quality Assurance accreditation standards. HCA must recognize and support this delegation arrangement without limiting or restricting the arrangement. HCA may periodically review the arrangement for effectiveness, and may evaluate whether to support future delegation arrangements.

HCA must seek approval from CMS to amend the Medicaid State Plan to allow directed payments that support 24 hours per day, 365 days per year crisis delivery system capacity. HCA must review recommendations of the ITA Work Group and use contract provisions to increase MCO accountability for their enrollee's long-term inpatient treatment needs.

HCA must include county and behavioral health provider representation in development of MCO procurement processes, including at a minimum two representatives from the Association of County Human Services and two representatives identified by the Washington Council on Behavioral Health.

Quarterly meetings between state agencies, counties, and behavioral health administrative services organizations to coordinate the behavioral health system must include the data-sharing needs of behavioral health system partners.