In July 1996, Tennessee initiated a managed mental health and substance
abuse program called TennCare Partners. This publicly funded "carve-out" experiment
started chaotically and soon deteriorated into a crisis. Many patients did
not receive care or lost continuity of care, and the traditional "safety net"
mental health system nearly disintegrated. This qualitative case study sought
to ascertain the impact of the TennCare Partners program. It points out that
the program's difficulties stemmed directly from a flawed design that spread
funds previously earmarked for severely mentally ill patients across the entire
Medicaid population. States contemplating similar reforms should strive to
protect vulnerable patients by risk-adjusting capitation payments and by focusing
resources on care for severely mentally ill persons. States should also minimize
program complexity and ensure the accountability of managed care networks
for their patients' behavioral health care needs.
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