Colorado’s Medicaid Mental Health Program Reduces Cost While Increasing Access to Services and Maintaining Quality of Care

by Rebecca Farley on June 24, 2011

A recent report by the Altarum Institute, a nonprofit research institution based in Ann Arbor, Michigan, examined the impact of the Medicaid managed mental health care carve-out model in Colorado. Comprehensive mental health services have been provided to Coloradans with Medicaid through a statewide managed care program for over 15 years. The program is managed by five Behavioral Health Organizations (BHOs) who contract with the Colorado Department of Health Care Policy and Financing (HCPF) to arrange for the provision of mental health services to members in their defined geographic areas of the state. 

In light of health care reform, the Colorado Behavioral Healthcare Council (CBHC), the membership organization that represents Colorado’s community mental health system, commissioned Altarum to study the impact of Colorado’s model of managed care for mental health on three essential elements to improve healthcare delivery: cost, access to services, and quality of care. CBHC also asked Altarum to complete a national literature review to compare the performance of a carved-out managed care program for mental health versus a fee-for- service approach.

According to George DelGrosso, Executive Director of CBHC, “Our members know there is a need to improve healthcare, and mental health and substance use disorder services need to be included. We wanted to study key areas policy makers are considering for this reform and to see how our managed care organizations have performed.”

Key findings in the report include:

  • Medicaid behavioral managed care plans slowed cost growth during rapid period of enrolled member expansion
  • Enrollment in Colorado behavioral managed care plans has increased from 150,000 to 510,000 since 1997. Rate increases over this period were far less than the rest of the medical sector due to a focus on community alternatives, early identification and prevention actions.
  • The BHOs increased access to services to accommodate increasing need while maintaining quality. o Quality metrics are improving while the number of people receiving care is vastly increasing.
  • Slower price increases compared to comparable services has saved Colorado millions
  • Since 1997, the BHOs have been able to control costs, while improving the quality of services and access.
  • Focused review of literature reveals the carve-out consistently outperforms a fee-for-service model
  • Decreased costs and enhanced outcomes are accomplished through service flexibility, focus on prevention and recovery, and an experienced and skilled network of providers.

The findings in the report indicate that Colorado’s BHOs need to be strongly considered as an essential partner when implementing health care reform. DelGrosso states, “The BHOs experience and track record in managing care will be a benefit to both public and private sector organizations who are planning to improve health care. The lessons we have learned and positive outcomes can also be effective in both physical and behavioral health.”

To read the Altarum Institute’s report or download a fact sheet of the report, go to:, or contact Brian Turner at 303-832-7594 ext. 13.



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