SAGE Report Considers Future Consolidations of Health/Disability Agency Functions, OMH/OASAS Merger

NYAPRS Note: Governor Cuomo’s Spending and Government Efficiency (SAGE) Commission has issued its final report (see

The following measures are endorsed in the report that are being implemented this year:

  • Downsizing of state mental health hospitals
  • Merging the investigation of abuse and neglect allegations within state disability agencies and providers, as well as some other disability related rights protections and monitoring activities into the Justice Center
  • State takeover of administration of state supplement to SSI payments

The report also contemplates two other major proposals for future consideration:

  • Creation of a Division of Central Services that would consolidate functions like facilities management, communication and legal services, and human resources for the “Health and Disabilities cluster,” which includes the Department of Health (DOH), the Office for Aging (OFA), the Office of Alcoholism and Substance Abuse Services (OASAS), the Office of Mental Health (OMH), and the Office for People with Developmental Disabilities (OPWDD).
  • Merger of the Office of Mental Health and Office of Alcoholism and Substance Abuse Services.

Consolidation and Rightsizing of Facilities

De-institutionalization of Mental Health and Developmental Disabilities Care

Mental Health Facilities

New York has a large institutionally-based mental health system that no longer serves people in the most appropriate setting from either a cost or therapeutic standpoint. New York has a high vacancy rate in its institutional facilities and more than twice as many facilities as the next closest state.

In 2011 and 2012, the Office of Mental Health (OMH) successfully restructured inpatient services and utilized the savings from this effort to substantially expand community services. This effort lowered average inpatient census by roughly 330 adults (10%) and 100 children (21%). Importantly, the better quality of care from this effort allowed the authorization of over 2,600 community residential opportunities, with appropriate supports and services to ensure individuals can live safely in the community.

Over the next two years, OMH plans to create regional centers of excellence for the diagnosis and treatment of complex behavioral health illnesses. This effort will ensure that there will be ample capacity for treating individuals with mental illness who require inpatient services, and the savings related to this State Psychiatric Center regionalization initiative will be reinvested to support the same or greater level of community-based services. This reinvestment will help facilitate earlier and better access to care.

Creation of the Justice Center

The Justice Center will be the single body responsible for tracking and investigating serious abuse and neglect complaints for facilities and provider agencies that are operated, certified, or licensed by the following six agen­cies: the Department of Health, the Office of Mental Health, the Office for People with Developmental Disabilities, the Office of Children and Family Services, the Office of Alcoholism and Substance Abuse Services, and the State Education Department. In addition, the Justice Center will absorb all functions and responsibilities of the Commis­sion on Quality of Care and Advocacy for People with Disabilities (CQC), except for CQC’s Federal Protection and Advocacy and Client Assistance Programs, which will be designated to a qualified non-profit.

The Justice Center will also create a new level of oversight and transparency for non-State operated facilities and programs licensed or certified by the State to serve vulnerable individuals. Additionally, the Justice Center will expand the State’s capacity to prosecute abusive and negligent individuals and organizations to the fullest extent of the law.

The Justice Center is a good example of breaking down agency silos to increase both efficiency and the quality of services the State provides. The State will realize both economies of scale and the ability to share best practices that ultimately better protect people by consolidating oversight of potential abuse now provided by six separate agencies into the Justice Center.

Health and Disabilities Cluster Shared Services

The Health and Disabilities cluster of State agencies includes the Department of Health (DOH), the Office for Aging (OFA), the Office of Alcoholism and Substance Abuse Services (OASAS), the Office of Mental Health (OMH), and the Office for People with Developmental Disabilities (OPWDD). The agencies in this cluster perform a number of com­mon functions.

These functions could either be centralized in a single agency or new division to be performed on behalf of other agencies cluster on a shared services basis. A number of other administrative and regulatory activities could in the future be consolidated within a new Division of Central Services for the Health cluster, which would provide these services to agencies in the cluster on a shared services basis.

The main reason that the Division of Central Services for the Health cluster is not being pursued at this time is the large number of other government redesign initiatives involving the Health cluster. These initiatives include implementation of Medicaid Redesign Team initiatives, the creation of the new Health Insurance Exchange, and the centralization of Medicaid rate setting and other Medicaid administrative activities. In order to ensure strong implemen­tation of these critical initiatives, it makes sense to defer creating a Division of Central Services until more progress is made in implementing these other critical initiatives.

Create a Division of Central Services for the Health cluster (more details)

A future option for the administration to consider is the creation of a Division of Central Services for the Health cluster to manage certain functions that are specific to this cluster on a shared services basis. Each of the health and disabilities agencies operates separate and distinct administrative operations such as facilities management, communication and legal services, and human resources. However, in performing these functions, the agencies are organized very differently. Operations are performed in many different ways from agency to agency and in many cases, without central direction within the cluster. As a result, there is lack of consistency in how these agencies manage these functions. Some agencies have centralized administrative functions, while others rely on the field and/or regional district offices for oversight and management. A Division of Central Services could distribute manpower and other resources more efficiently and promote best practices across agencies.

Currently, 1,000 FTEs are involved in certification, licensure, credentialing, and surveillance of health and disabilities programs. Much of the staff in these functions could formally remain under the auspice of their existing agencies, but would be coordinated by the Division of Central Services within a shared services model.

As part of a broader effort by the Cuomo administration to rationalize the number of regional offices various agencies and authorities operate, the health and disability agencies could colocate field offices wherever possible to improve efficiency and coordination. In order to oversee quality and support operations at the local level, each of the four major operating agencies has a regional structure. These regional organizations support many similar functions, particularly in the areas of licensure and inspection. These centers vary, however, in numbers (DOH has 4, OMH has 5, OASAS has 11 and OPWDD has 13), areas served and the degree of operational responsibilities. The lack of coordination or integration of their licensure and inspection activities often presents challenges to providers seeking to serve multiple populations.

Aligning the boundaries of agencies’ field offices would relieve a significant problem faced by providers who serve more than one population. Because of the different area boundaries, a provider in Binghamton, for instance, needs to work with agency field offices in Syracuse and in Rochester. Providers also are required to submit two licensure and certification reviews of the same records and materials to two different State agencies.

Centralize Medicaid Rate-Setting Activities

There currently are four State agencies-DOH, OASAS, OMH and OPWDD-that have responsibility for performing a rate-setting function (predominantly for Medicaid) to determine funding levels for various services and individual providers of services within those agencies. Tens of thousands of rates, prices, and fees are established for thousands of providers across these four agencies, with little coordination. As a result, reimbursement for similar goods and services can vary significantly. A number of providers funded by Medicaid are multi-service providers, and are funded by two or more of the four State agencies. These four State agencies combined have approximately 150 employees and other significant (primarily technology-related) resources invested in this function.

The 2013-14 Executive Budget proposes to consolidate all Medicaid administrative activities into DOH, including all activities related to managed care plans in Medicaid rate setting in claims processing activities. This central­ized approach will enable closer coordination and oversight of rate-setting policies and methodologies. These rate-setting activities will also include such matters as cost reporting, capital reviews and data management.

Merger of Behavioral Health Agencies

New York State has two agencies primarily responsible for the treatment of individuals with behavioral health dis­orders - the Office of Mental Health (OMH) and the Office of Alcoholism and Substance Abuse Services (OASAS). Both agencies have substantial overlaps in the populations they serve, relationships with counties and managed care organizations (MCOs), recordkeeping, and field organizations. In fact, New York is one of only two states in which substance abuse is handled by a stand-alone agency.

The overlaps between OASAS and OMH include:

Consumers with co-occurring disorders: 24% of adults with serious mental illness served by OMH also have a substance use disorder in a given year. This number increases to about 50% over the course of a person’s life. From the substance abuse side, about 40% of the clients served by OASAS also have a mental health diagnosis. This overlap totals approximately 140,000 people in any given year. Numerous studies show that these are among the most difficult and costly clients to engage and serve.

Common providers that wish to serve individuals who have both mental illness and/or addiction dis­orders: Currently, service providers that wish to serve individuals with mental illness, individuals with addictions or individuals with co-occurring disorders must get separate licenses from both OMH and OASAS. At present, approximately 164 service providers are dual licensed. The regulations governing the two programs are distinct and not always consistent, even for similar services.

Similar relationships with county governments: Mental health and addiction responsibilities are man­aged at the county government level by mental hygiene departments that interact with both OMH and OASAS. Despite the consolidation of mental health and addiction care at the county level, OMH and OASAS manage State aid funding to counties separately. Agencies providing services have to develop separate budgets and fiscal reports to submit to each agency, bill separately and deal with separate State oversight processes.

Redundant medical/program records requirements: Program records maintained by providers regulated by OMH or OASAS or participating in the Medicaid program are frequently redundant. A joint project undertaken on Long Island by OMH, OASAS and providers established a uniform case record that would meet the needs of programs regulated by either agency. While this project has proven successful in reducing duplication, it took over three years to design and implement and does not extend statewide.

Similar use of data to enhance service outcomes: OMH and OASAS have separately been devel­oping data systems and algorithms to identify high risk patients. Additionally, both agencies use Medicaid claims and encounters for planning and monitoring functions but receive different sub­sets of the data and analyze them differently. As a result, neither agency is able to fully understand the extent of overlap between the populations or develop integrated information that could assist providers in serving consumers.

Similar field organizations: Both agencies currently operate field offices-5 for OMH and 6 for OASAS. These offices manage contracts, conduct licensing visits, develop programs and work with local govern­ment. Additionally, many of the State-operated addiction treatment centers are located on the grounds of OMH psychiatric centers, but are in separate buildings.

Benefits and Obstacles to OMH/OASAS Mergers

In light of these substantial overlaps, merging OMH and OASAS would offer a number of benefits. A consolidated agency structure could improve service and generate operating efficiencies through the integration of care, regu­lations, program models, data and financial practices. Consolidation would also reduce the burden on counties, providers, MCOs and others who currently must interact with both agencies in ways that are frequently redundant.

A potential obstacle to the merger is that although 40% of people served by OASAS also have a mental health diag­nosis, that still means 60% do not. This-and the much larger size of the mental health system-leads to concerns among traditional substance abuse providers that integration could lead to homogenization of service and a reduction in the quality of care for certain clients.

A number of preparatory steps could be taken that might address these concerns and build confidence among out­side stakeholders and providers. These include:

Engagement with stakeholders of both agencies to demonstrate that a combined entity will respect the important difference between the mental health and substance abuse communities. This includes pre­senting evidence that reimbursement rates in the new behavioral health organization will be fair to both sets of providers and that programs for individuals without co-occurring disorders will remain separate.

Integration of some functions as a precursor to full merger. This includes conforming regulations at both agencies to allow for integrated treatment and oversight. Additionally, OMH and OASAS can be­gin consolidating some agency functions by co-locating field offices and coordinating their licensure and surveillance activities.

State Takeover of State Supplement of SSI

One such project - the State takeover from the federal government of the administration of the State supplement to federal Supplemental Security Income (SSI) payments, which was authorized in the 2012-13 Budget - will save approximately $75 million annually.