TENNESSEES FAILED MANAGED CARE PROGRAM FOR MENTAL-HEALTH AND SUBSTANCE-ABUSE SERVICES

In July 1996, Tennessee initiated a managed mental health and substanc e abuse program called TennCare Partners. This publicly funded ''carve -out'' experiment started chaotically and soon deteriorated into a cri sis, Many patients did not receive care or lost continuity of care, an d the traditional ''safety net'' mental health system nearly disintegr ated. This qualitative case study sought to ascertain the impact of th e TennCare Partners program. It points out that the program's difficul ties stemmed directly from a flawed design that spread funds previousl y earmarked for severely mentally ill patients across the entire Medic aid 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, State s should also minimize program complexity and ensure the accountabilit y of managed care networks for their patients' behavioral health care needs.