Mental Health: Community-Based Care Increases for People With Serious
Mental Illness (Letter Report, 12/19/2000, GAO/GAO-01-224).

Between 1987 and 1997, the growth in mental health spending in the
United States roughly paralleled the growth in overall health care
spending. However, federal mental health spending grew at more than
twice the rate of state and local spending. This led to the federal
government's share surpassing that of state and local governments, while
the share attributable to private sources declined slightly. The ability
to care for more people in the community has been facilitated by the
continued development of new medications that have fewer side effects
and are more effective in helping people manage their illness.
Furthermore, treatment approaches such as assertive community treatment,
supported employment, and supportive housing have been developed to
provide the multiple forms of ongoing assistance that adults with
Serious Mental Illness (SMI) often need if they are to function in the
community. The Health Care Financing Administration (HCFA) has
encouraged the use of community-based services for Medicaid
beneficiaries with SMI by disseminating information on the use of new
medications and treatment models, which can help people function better
in the community. HCFA also supports states' use of Medicaid managed
health care services. However, incentives associated with capitated
payment can lead to reduced service utilization. HCFA is developing a
set of safeguards for people with special health care needs enrolled in
Medicaid managed health care and has indicated that it will devise a
plan to implement these safeguards, such as through legislative or
regulatory action or making changes in Medicaid administrative policies.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-224
     TITLE:  Mental Health: Community-Based Care Increases for People
	     With Serious Mental Illness
      DATE:  12/19/2000
   SUBJECT:  Mental health care services
	     Managed health care
	     State-administered programs
	     Community health services
	     Disadvantaged persons
IDENTIFIER:  Medicare Program
	     Medicaid Program

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GAO-01-224

A

Report to the Committee on Finance, U. S. Senate

December 2000 MENTAL HEALTH Community- Based Care Increases for People With
Serious Mental Illness

GAO- 01- 224

Letter 3 Appendixes Appendix I: Scope and Methodology 22

Appendix II: Involuntary Outpatient Commitment 23 Appendix III: Selected
SAMHSA Efforts to Help the Implementation

of Community- Based Programs 24 Appendix IV: Selected Community- Based
Approaches to Treating

People With Serious Mental Illness 25 Appendix V: Selected HUD Programs That
Can Assist Homeless

People Who Have SMI 29 Appendix VI: Comments From the Substance Abuse and
Mental

Health Services Administration 30 Appendix VII: Comments From the Health
Care Financing

Administration 32 Appendix VIII: GAO Contact and Staff Acknowledgments 35

Table Table 1: Community Mental Health Services Designed to Address Needs of
Adults With SMI 13

Figure Figure 1: Percentage of Total Mental Health Expenditures by Funding
Source, 1987 and 1997 10

Abbreviations

ACT assertive community treatment APA American Psychiatric Association BBA
Balanced Budget Act of 1997 CMHC community mental health center HCFA Health
Care Financing Administration HHS Department of Health and Human Services
HUD Department of Housing and Urban Development IPS Individual Placement and
Support NASMHPD National Association of State Mental Health Program
Directors NIMH National Institute of Mental Health SAMHSA Substance Abuse
and Mental Health Services Administration SMHA state mental health agency
SMI serious mental illness

Lett er

December 19, 2000 The Honorable William V. Roth, Jr. Chairman The Honorable
Daniel Patrick Moynihan Ranking Minority Member Committee on Finance United
States Senate

Mental disorders take an enormous toll on the nation's families and
finances. The indirect costs of mental illness, such as for lost
productivity, were estimated at $78.6 billion in 1990. In 1997, $73 billion
was spent on mental health services. The Surgeon General has estimated that
about 20 percent of the U. S. population is affected by a mental disorder in
a given year. 1 About 5 percent of the population are considered to have a
serious mental illness (SMI). SMI, which includes, among other diseases,
schizophrenia, bipolar disorder, and major depression, is a chronic
condition that can substantially limit a person's ability to function in
many areas of life such as employment, self- care, and interpersonal
relationships. Effective treatment can reduce the severity of these problems
for the majority of people with SMI. Much of this treatment can now be
provided in the community rather than in institutions.

Because of your long- standing concern with the availability and financing
of mental health services, you asked us to review mental health services for
people with SMI. Specifically, you asked us to (1) provide information on
mental health spending and how it has changed since the 1980s; (2) identify
the types of community- based services that are provided to adults with SMI,
including people who are homeless, and difficulties in providing these
services; and (3) determine how the Health Care Financing Administration
(HCFA), which administers the Medicaid program, supports the provision of
community- based services for adults with SMI who are eligible for Medicaid.

To answer these questions, we interviewed and obtained documents from
officials at the Department of Health and Human Services' (HHS) Substance
Abuse and Mental Health Services Administration (SAMHSA), HCFA, and the
National Institute of Mental Health (NIMH). We also visited

1 Mental Health: A Report of the Surgeon General( Rockville, Md.: U. S.
Department of Health and Human Services, 1999).

state mental health and Medicaid officials and service providers in Michigan
and New Hampshire, states that have been identified as operating exemplary
community- based programs. In addition, we reviewed documents from the
National Association of State Mental Health Program Directors (NASMHPD).
Finally, we interviewed officials from several organizations concerned with
mental health issues as well as individual experts on mental health. (For
additional information on our methodology, see app. I.) We conducted our
work between May and November 2000 in accordance with generally accepted
government auditing standards.

Results in Brief Between 1987 and 1997, the growth in mental health spending
in the United States roughly paralleled the growth in overall health care
spending. After

adjusting for overall inflation, spending on mental health services grew by
4 percent a year, on average, compared with 5 percent a year for spending on
all health care. However, federal mental health spending grew at more than
twice the rate of state and local spending. This led to the federal
government's share surpassing that of state and local governments, while the
share attributable to private sources declined slightly. Increasing Medicaid
and Medicare expenditures accounted for the larger federal share, with
combined federal and state Medicaid expenditures accounting for 20 percent
of all mental health spending in 1997.

The focus of care for adults with SMI has continued to shift from providing
services in psychiatric hospitals to providing services in the community.
The ability to care for more people in the community has been facilitated by
the continued development of new medications that produce fewer side effects
and are more effective in helping people manage their illness. Furthermore,
treatment approaches such as assertive community treatment (ACT), supported
employment, and supportive housing have been developed to provide the
multiple forms of ongoing assistance that adults with SMI often need if they
are to function in the community. These approaches can also help homeless
people with SMI, whose treatment needs are additionally complex, partly
because many of them also suffer from a substance abuse disorder.
Coordinating and integrating services can be effective in treating people
with multiple needs, and organizing care in this way is especially important
for people making the transition from institutions to the community.

Medicaid is a major source of support for people with SMI. HCFA has
encouraged the use of community- based services for Medicaid beneficiaries
with SMI by disseminating information on the use of new

medications and treatment models, which can help people function better in
the community. HCFA has also supported states' use of Medicaid managed care
waivers to provide a wider array of community- based mental health services.
However, incentives associated with capitated payment can lead to reduced
service utilization. Recognizing the risks for people with special health
care needs, such as serious mental illness, the Congress required HCFA to
take steps to ensure that beneficiaries enrolled in managed care receive
appropriate care. HCFA is developing a set of safeguards for such people
enrolled in Medicaid managed care. The safeguards provide measures that
states can take to better ensure that beneficiaries can obtain the services
and supports they need to function. HCFA has indicated that it will devise a
plan to implement these safeguards, such as through legislative or
regulatory action or making changes in Medicaid administrative policies.
Effective oversight to ensure that adequate safeguards are implemented will
be essential to provide meaningful protection to this vulnerable population.
SAMHSA and HCFA commented on a draft of this report and generally agreed
with our findings.

Background Historically, people with SMI were cared for primarily in
hospitals. States developed a system of public mental hospitals, but by the
1960s they were

viewed as ineffective and inadequate because of overcrowding, staff
shortages, and poor facilities. Advocates and reformers contended that long-
term institutional care in the hospitals had been characterized by patient
neglect and ineffective treatment. Improved medications that reduced some of
the symptoms of mental illness allowed more people to live in the community
with support.

Certain legislative and judicial actions contributed to a changed focus of
providing community- based rather than institutional care. In 1963, the
Community Mental Health Centers Act authorized the development of a
nationwide network of community mental health centers (CMHC) to replace
state institutions as the main source of treatment for people with SMI and
to decrease the incidence of mental illness in the broader population. 2 The
act and amendments created federal grants for states to build the CMHCs and
staff them for 8 years. Funds were intended to supplement existing state and
local revenues to help communities develop the new services necessary for
adequate community mental health care.

2 Pub. L. No. 88- 164, title II, 77 Stat. 290.

States and communities were expected to develop alternative funding sources
to eventually replace the federal funds. CMHCs were required to provide a
number of services, including inpatient, outpatient, emergency, and day care
services; follow- up care for people released from mental health facilities;
and transitional living facilities. CMHCs were also required to coordinate
service delivery with other mental health and social service providers in
the community.

The vision of a national network of community mental health centers was not
fulfilled. Many communities were unable to find the funds to match federal
dollars to build the CMHCs or to provide all the required services; others
were unable to find qualified professionals to staff the centers. 3 As of
1980, only 768 of the projected 2,000 CMHCs had been funded. Moreover,
implementation of the CMHC act did not adequately address the needs of
people with SMI who were released from institutions. The CMHC program's
regulations emphasized the prevention and treatment of mental disorders in
the broader population, and CMHCs did not provide the intensive, more
comprehensive services people with SMI required, such as housing, support
services, and vocational opportunities in addition to treatment. Medication
was the only service provided to many patients. Further, the extent to which
CMHCs coordinated with mental hospitals concerning the release of patients
to their communities varied. Section 901 of the Omnibus Budget
Reconciliation Act of 1981 ended federal funding to states specifically for
community mental health centers and replaced it with block grants to the
states to support services for people with SMI. 4

A series of court decisions in the 1970s establishing that
institutionalization is a deprivation of liberty also played a role in
moving people with SMI away from institutions into the community. States had
previously exercised broad latitude in allowing an individual with mental
illness to be involuntarily confined, but court rulings recognizing
individuals' right to refuse treatment made it difficult to commit people to
a psychiatric hospital without their consent. In 1975, the Supreme Court
held that mentally ill individuals could not be committed involuntarily
unless they were found to be dangerous to themselves or others. 5 This led
to a reform

3 Later amendments set out more specific requirements for CMHCs. Community
Mental Health Centers Amendments of 1975, Pub. L. No. 94- 63, title III, 89
Stat. 304, 308. 4 Pub. L. No. 97- 35, 95 Stat. 543.

5 O'Connor v. Donaldson, 422 U. S. 563 (1975).

of state laws, which now generally allow involuntary inpatient commitment
only if persons present a clear danger or threat of substantial harm to
themselves or others. Some state laws specify that inpatient commitment is
appropriate only after full consideration of less restrictive alternatives,
such as involuntary outpatient commitment. (See app. II for a discussion of
involuntary outpatient commitment.) A recent Supreme Court opinion has
brought additional pressure on states to offer community- based treatment to
people with mental illness when such treatment is appropriate, the
individuals do not oppose such treatment, and the placement can be
reasonably accommodated, taking into account the state's resources. 6

The public mental hospital population declined. Many people with SMI
returned to communities without adequate mental health services and some of
these people became homeless. Other major factors contributing to
homelessness were unemployment, a decline in the supply of lowincome
housing, and alcohol and drug abuse.

The State and Federal Roles State mental health agencies (SMHA) have primary
responsibility for

in Supporting Mental Health administering the public mental health system,
through their role as a

Services purchaser, regulator, manager, and, at times, provider of mental
health

care. The public mental health system serves as a safety net for people who
are poor or uninsured or whose private insurance benefits run out in the
course of their serious mental illness. Many people with SMI are unemployed,
and they are often poor and financially dependent on government support.
SMHAs arrange for the delivery of services to more than 2 million people
each year, most of whom suffer from a serious mental illness. Services are
delivered by state- operated or county- operated facilities, nonprofit
organizations, and other private providers. The sources and amounts of
public funds SMHAs administer vary from state to state but usually include
state general revenues and federal funds.

The federal funds that SMHAs administer generally include Medicaid and
Medicare payments for services provided in state- owned or state- operated
facilities and other Medicaid payments when the state Medicaid agency has
authorized the SMHA to control all Medicaid expenditures for mental health
services. HCFA's Medicaid and Medicare programs pay for certain mental
health services for eligible beneficiaries. States operate their own
Medicaid programs within broad federal requirements. Medicaid pays for

6 Olmstead v. L. C., 527 U. S. 581 (1999).

mandatory services, such as physician services, and optional benefits that
states may choose to provide, such as rehabilitation and targeted case
management. Since Medicaid is an entitlement program, states and the federal
government are obligated to pay for all covered services that are provided
to an eligible individual. 7 Each state program's federal and state funding
share is determined through a statutory matching formula, with the federal
share ranging from 50 to 80 percent. 8

In the 1990s, state Medicaid programs increasingly turned to capitated
managed care plans to provide medical and behavioral health services as a
way to control costs and improve services. Twenty- two states have
“carved out,” or separated, mental health services from physical
health services in contracting with managed care plans, placing them under
separate financing and administrative arrangements. Some states create
separate capitated arrangements and others use fee- for- service
arrangements. 9

Medicare covers elderly persons and persons who receive Social Security
Disability Insurance, and it pays for a range of inpatient and outpatient
mental health services. 10 The Medicare statute requires a 50- percent
copayment from beneficiaries for outpatient care of mental disorders,
compared with 20 percent for other medical outpatient treatment. 11
Furthermore, the Medicare statute limits treatment in a freestanding
psychiatric hospital to a total of 190 days in a patient's lifetime. 12

7 For adults aged 22 to 64, Medicaid does not cover most services provided
in institutions for mental disease, which are hospitals, nursing facilities,
or other institutions of more than 16 beds primarily engaged in caring for
people with mental illness. In addition, some states restrict the number of
mental health services a person can receive in a year, require prior
authorization for certain services, or both.

8 In 1995, the average size of the federal match was 57 percent. 9 States
may require people eligible for Medicaid to enroll in a managed care plan if
the state receives a waiver from HCFA under section 1115 or 1915( b) of the
Social Security Act (42 U. S. C. 1315 and 1396n( b)). In addition, section
4701 of the Balanced Budget Act of 1997 (BBA) amended the Social Security
Act to authorize states to establish Medicaid managed care programs simply
by amending their state Medicaid plans. Pub. L. No. 105- 33, 111 Stat. 251,
489 (classified at 42 U. S. C. 1396u- 2).

10 After receiving Social Security Disability Insurance benefits for 24
months, a person becomes eligible for Medicare. 11 42 U. S. C. 1395 l( c).

12 42 U. S. C. 1395( d)( 3).

SMHAs also administer the funds they receive from SAMHSA's Community Mental
Health Services Block Grant program. Block grants are allocated to states
according to a statutory formula that takes into account each state's
taxable resources, personal income, population, and service costs. The
grants give states and territories a flexible funding source for providing a
broad spectrum of community mental health services to adults with SMI and
children with a serious emotional disturbance. Funding for the block grant
program totaled $356 million in fiscal year 2000; SAMHSA used about $18
million for state systems development, including technical assistance, data
collection, and evaluation. The remainder was awarded to the states and
territories, with an average award of about $5.7 million. (See app. III for
other SAMHSA programs that help implement community- based mental health
services.)

Federal Mental Health In 1997, the nation spent about $73 billion for the
treatment of all mental

illness, up from $37 billion in 1987. 13 Mental health spending grew at
about Spending Grew Faster

the same rate as overall health spending during this period. After adjusting
Than State and Local

for overall inflation, spending for all health care grew by 5 percent a
year, Spending, and the Role

on average, compared with 4 percent for spending on mental health services.
14 In 1997, the public sector (that is, federal, state, and local of
Medicaid and

governments) provided 55 percent of mental health spending, in contrast to
Medicare Increased

providing less than half (about 46 percent) of overall health care spending.
From 1987 to 1997, adjusted annual federal spending for mental health grew,
on average, more than twice as fast as state and local mental health
spending (6. 3 percent versus 2. 4 percent). This led to the federal
government's share of total mental health expenditures increasing from 22 to
28 percent during the period, while state and local governments' share of
spending declined from 31 to 27 percent. 15 The proportion from private
spending sources also declined slightly from 46 to 45 percent (see fig. 1).

13 National information is not collected specifically on the amount of money
spent to treat serious mental illness. HCFA, SAMHSA, and others collect
information only on overall mental health spending.

14 Growth rates are based on data in National Expenditures for Mental Health
and Substance Abuse Treatment 1997( Rockville, Md.: U. S. Department of
Health and Human Services, 2000). The gross domestic product deflator was
used to adjust for inflation. 15 Federal expenditures included Medicaid's
contribution, Medicare payments, and other federal expenditures, such as
those from the Community Mental Health Services Block Grant and the
departments of Defense and Veterans Affairs.

Figure 1: Percentage of Total Mental Health Expenditures by Funding Source,
1987 and 1997

1987 1997 Other

Other Private

Private 3.6%

2.6% Other State and Local Out- of- Pocket

Other State Out- of- Pocket

19.2% 19.8%

and Local 17.8%

24.4%

State and State and

Local: Local:

27.1%

State

Private: 46.4% 31.3%

Private: 44.8%

Medicaid State

7.9% Medicaid 6.9%

Private

Federal: 22.3%

Private

Federal: 28.1%

Federal Insurance

Federal Insurance

Medicaid 23.0%

Medicaid 24.4%

11.8% 8.5%

Other Medicare

Other Medicare

Federal 8.0%

Federal 12.4%

5.9% 3.9%

Total Expenditures = $37.1 billion Total Expenditures = $73.4 billion

Note: Percentages may not total 100 because of rounding. Source: National
Expenditures for Mental Health and Substance Abuse Treatment 1997(
Rockville, Md.: U. S. Department of Health and Human Services, 2000).

Medicaid and Medicare played increasingly important roles in funding mental
health services between 1987 and 1997. Medicaid's proportion of mental
health spending (federal and state) rose from slightly more than 15 percent
($ 5. 7 billion) to about 20 percent ($ 14. 4 billion). Medicare's share
rose from 8 percent to slightly more than 12 percent, with expenditures
increasing from about $3 billion to $9 billion. HCFA and SAMHSA officials
have suggested several reasons for Medicaid's increase. These include the
trend toward Medicaid beneficiaries receiving their inpatient care in
psychiatric units of general hospitals, where services are covered by
Medicaid, rather than in psychiatric hospitals, where services are not
covered; increased costs for psychiatric medications; and states' increased
use of Medicaid to pay for community- based mental health services. The
increase in Medicare spending may be associated in part with a 1990

statutory change that expanded coverage to nonphysician professionals
providing mental health services, such as psychologists, clinical social
workers, and nurse practitioners. 16

Community- Based Over the past 20 years, states have largely shifted the
care of people with

Services Are Designed SMI from institutions to the community. The continued
development of

psychotropic medications that both are more effective and produce fewer to
Address the

side effects has facilitated the ability to care for more people with SMI in
Complex Needs of

the community. Furthermore, treatment approaches such as ACT, Adults With
Serious

supported employment, and supportive housing can provide the multiple forms
of ongoing assistance that adults with SMI often need to function.

Mental Illness These approaches can also help homeless people with SMI, who
have

particularly complex treatment needs and who often have difficulty gaining
access to the multiple services they need. Integration and coordination of
services have been found to be effective in treating people with multiple
needs.

Care Emphasis Continues to The focus of mental health services for people
with SMI has continued to

Shift From Institutions to shift from providing care in psychiatric
hospitals to providing communitybased

Community Services care. From 1980 to 1998, the number of patients
institutionalized in

state and county mental hospitals decreased by almost 60 percentï¿½by the end
of 1998, about 57,000 people were in state or county psychiatric hospitals.
17 Although nationwide expenditure data are not available, data from 33
states show that state mental health agencies' expenditures for psychiatric
hospitals dropped from 52 percent to 35 percent of total expenditures
between 1987 and 1997, while community- based spending rose from 45 percent
to 63 percent. 18

The continued development of new antidepressant and antipsychotic
medications has helped make it possible to care for more people with SMI

16 Before 1990, generally only mental health services delivered by
physicians were covered under Medicare. 17 Additions and Resident Patients
at End of Year, State and County Mental Hospitals by Age and Diagnosis by
State, United States 1998( Rockville, Md.: SAMHSA, Center for Mental

Health Services, 2000). 18 Expenditure data were reported to NASMHPD by the
33 states, representing 74 percent of the U. S. population in 1997, in state
fiscal years 1987 and 1997.

in the community. The newer medications further improve the ability of
people with SMI to live in the community, receive care at a general hospital
or in other clinical settings, and manage symptoms of their illness. The
Surgeon General recently reported, for example, that the newer antipsychotic
medications show promise for treating people with schizophrenia for whom
older medications are ineffective, by reducing symptoms such as delusions,
hallucinations, disorganized speech and thinking, and catatonic behaviors.
19 Further, the Surgeon General reported that some of the newer drugs carry
fewer and less severe side effects, generally resulting in better compliance
with medication regimens, and that they may improve a person's quality of
life and responsiveness to other treatment interventions. Patients using
certain medications, however, require careful monitoring to ensure that they
are receiving the appropriate dose and to minimize side effects. For
example, in about 1 percent of patients, clozapine causes agranulocytosis, a
potentially fatal loss of white blood cells that fight infection. Because
this condition is reversible if detected early, weekly blood monitoring is
critical.

States have supported an array of community- based services that are
designed to enable people with SMI to remain in their communities and live
independently. States frequently provide services directly or contract with
county or community mental health organizations to offer services. Although
most care is provided on an outpatient basis, people with SMI sometimes
experience periods when they are unable to care for themselves and need
short- term hospitalization. Table 1 describes types of mental health
services for adults with SMI provided in the community.

19 Mental Health: A Report of the Surgeon General.

Table 1: Community Mental Health Services Designed to Address Needs of
Adults With SMI

Service Description

Ambulatory Services provided in an outpatient setting that may include the
following: Counselingï¿½individual, family, or group therapy that can be
provided in an office or community setting, such as the person's home or
employment site; Medication dispensing and monitoringï¿½directly administering

medications to an individual and observing the individual to identify both
beneficial and inadvertent or undesirable side effects; Case
managementï¿½helping clients obtain financial, housing, medical,

employment, social, transportation, and other community resources; Crisis
interventionï¿½screening, psychiatric evaluation, emergency intervention, and
stabilization; and Day treatment/ psychosocial rehabilitationï¿½structured
program activities including services such as social support, vocational
training, and independent living skills

Residential Services provided in group homes, independent or shared
apartments, and single- room occupancies that may include training, support,
medications, and supervision of routine activities, including community
orientation, meal preparation, financial management, and transportation

Inpatient Services provided in facilities such as a general hospital or
inpatient unit of a community mental health clinic, including diagnosis and
treatment services

Many people with SMI need a range of services to help them function in the
community. Several approaches to providing ongoing assistance and
coordinated services have been developed to meet the varying needs of this
population, such as ACT, supported employment, and supportive housing. ACT
is a model of providing intensive care to people with the most severe and
persistent mental illness. It is generally targeted toward people who have
recently left institutions, typically do not schedule or keep appointments,
or do not do well without extensive support. Under the ACT model,
multidisciplinary teams are to be available to provide services around the
clock in community settings, such as at the person's home. Services can
include administering medications, interpersonal skills training, providing
crisis intervention, and providing employment assistance and are intended to
be available as long as the person needs them. Supported employment programs
assist people who have SMI to work in competitive jobs. Some supported
employment programs emphasize quick placement into regular jobs, rather than
training people before job placement, and then help enable individuals with
SMI to perform acceptably in their jobs. Supportive housing programs attempt
to address the needs of people with SMI who have been homeless or who are at
risk of

becoming homeless by combining housing with other needed services, such as
case management and substance abuse treatment. (For more detailed
information on ACT, supported employment, and supportive housing, see app.
IV.)

Homelessness Complicates Approximately 1 in 20 adults with SMI are homeless;
they account for an

the Treatment of Adults estimated one- third of the approximately 600,000
homeless adults in the

With Serious Mental Illness United States. At least half of homeless people
with SMI also have

substance abuse disorders. Mental illness in combination with substance
abuse may predispose individuals to homelessness, as their conditions often
lead to disruptive behavior, loss of social supports, financial problems,
and an inability to maintain stable housing. Homelessness adds to the
complexity of treatment needs for people with SMI; beyond mental health
services, they need a range of physical health, housing, and social
services. Compared with other homeless people, those with SMI are generally
in poorer physical health, are homeless for longer periods of time, and
often reside on the streets.

Homeless people with SMI have difficulty gaining access to the full range of
health care, housing, and support services they need. Typically, they lack
the income verification documentation necessary to enroll in entitlement
programs, such as Medicaid; they have problems maintaining schedules; and
they lack transportation. The Department of Housing and Urban Development
(HUD) funds programs, including rental assistance and housing development
grants, that have been used to help homeless people with SMI obtain housing.
(See app. V.) Researchers and experts widely agree that the demand for low-
income housing and housing subsidies far exceeds the supply. According to
the National Coalition for the Homeless, many traditional mental health
providers are neither equipped to handle the complex social and health
conditions of homeless people nor typically linked to the range of services
needed for their recovery and residential stability. Traditionally, separate
systems have provided these servicesï¿½such as the mental health, substance
abuse, public housing, and social welfare systemsï¿½each of which has its own
eligibility and program requirements. It is particularly difficult for
people with SMI to negotiate systems in which services are separate and
uncoordinated.

Research indicates that coordinated service delivery is important for
meeting the numerous and complex needs of homeless people with SMI. 20 One
study found that homeless people with SMI who participated in programs using
an integrated treatment approach- in which multiple services were provided
through a single entity- spent more days in stable housing (such as an
apartment or group home) and reduced their alcohol use more than those
receiving services through multiple agencies. 21 SAMHSA's Access to
Community Care and Effective Services and Supports programï¿½an
interdepartmental demonstration program integrating housing, mental health,
substance abuse, employment, and social support servicesï¿½found that service
system integration was associated with improved access to housing services
and better housing outcomes for homeless people with mental illness. 22

Efforts are under way to coordinate services to reduce the number of
homeless people with SMI who become incarcerated. 23 SAMHSA is funding a
study of programs for diverting adults with mental illness and substance
abuse problems from the criminal justice system to community- based
treatment. According to SAMHSA, diversion programs are often the most
effective way to integrate an array of mental health, substance abuse, and
other support services to help people break the cycle of repeated
incarceration. In some communities, mental health courts are designed to
hear the cases of people with mental illness who are arrested for
misdemeanors such as loitering or creating a public nuisance. In these

20 We discuss the issues of coordination and integration of services for
homeless people in more detail in Homelessness: Coordination and Evaluation
of Programs Are Essential (GAO/ RCED- 99- 49, Feb. 26, 1999) and
Homelessness: State and Local Efforts to Integrate and Evaluate Homeless
Assistance Programs( GAO/ RCED- 99- 178, June 29, 1999).

21 Robert E. Drake and others, “Integrated Treatment for Dually
Diagnosed Homeless Adults,” The Journal of Nervous and Mental Disease,
Vol. 185, No. 5 (1997), pp. 298- 305. 22 The departments of Agriculture,
Education, Housing and Urban Development, Labor, and Veterans Affairs were
also involved in this program. 23 In 1999, the Department of Justice
reported that 60 percent of inmates with mental illness were under the
influence of alcohol or drugs at the time of their offense and that 20
percent of those with mental illness had been homeless at some time during
the 12 months before they were arrested.

programs, people with mental illness can have their case heard by the mental
health court and can agree to follow a plan of mental health treatment and
services instead of going to jail. 24

HCFA Is Supportive of HCFA has disseminated information to states about the
more effective

New CommunityBased medications and treatments for adults with SMI and has
supported states'

use of Medicaid managed mental health care to provide a wider array of
Services and Is

services not covered by traditional fee- for- service Medicaid. HCFA is
Developing Safeguards

developing safeguards to help ensure that states that use managed care for
the Use of Managed

arrangements furnish appropriate services to people with special health care
needs, including people with SMI.

Care HCFA Has Encouraged

HCFA has taken steps to encourage states to use new modes of care for States
to Provide Advanced

adults with SMI. In June 1999, HCFA issued a letter to state Medicaid
Treatments

directors noting that research had demonstrated that ACT is an effective
strategy for treating persons with SMI. The letter stated that states should
consider these positive findings in their plans for comprehensive approaches
to community- based mental health services. 25

HCFA has also encouraged the use of newer medications. In a letter to state
Medicaid programs in 1998, it provided information on the effectiveness of
new antipsychotic medications in treating schizophrenia. HCFA noted that

24 A federal demonstration program to promote mental health courts has been
authorized for fiscal years 2001 through 2004. Under the America's Law
Enforcement and Mental Health Project, in consultation with the Secretary of
HHS, the Attorney General is to make matching grants to states and
municipalities to establish up to 100 such courts throughout the nation.
These courts will hear cases involving individuals with SMI charged with
misdemeanors or nonviolent offenses, with the purpose of diverting many of
them into appropriate mental health treatment. Among other things, grant
funds will also be used to provide specialized training of law enforcement
and judicial personnel. Pub. L. No. 106- 515, 114 Stat. 2399 (2000) (to be
classified at 42 U. S. C. 3796ii et seq.).

25 HCFA is also jointly sponsoring a contract with SAMHSA to examine the
factors that contribute to the successful implementation of ACT programs at
the state level. HCFA states that this contract will also review how states
are using Medicaid and other resources to support ACT programs, how programs
are designed to meet the needs of people with serious and persistent mental
illness, and the outcomes of services.

some states and managed care organizations with formularies have already
adjusted them to recognize these new medications. 26 HCFA suggested that all
states consider the medications' advantages in reducing side effects,
increasing patient compliance with treatment regimens, and possibly reducing
psychiatric hospital readmissions.

HCFA has used its waiver authorities to support some states' initiatives to
use Medicaid managed care carveout programs to enhance their provision of
mental health services. With a waiver, states may gain the opportunity to
provide some community- based mental health services that are not usually
covered by fee- for- service Medicaid, provided they do not increase overall
spending. For example, while many ACT program services can be reimbursed
under existing Medicaid policies, some services, such as family counseling
and respite care, are typically not reimbursable through Medicaid's
traditional fee- for- service program. A survey of states with mental health
carveout waivers found that some states did use the waiver to add coverage
for services not previously included in their Medicaid plans, most
frequently psychiatric rehabilitation and case management. 27

Safeguards Are Important to As HCFA has noted in a draft report on
strengthening Medicaid managed

Ensure Access to Care for care, managed care organizations are often not
accustomed to serving

Medicaid Beneficiaries in people with special health needs, such as adults
with SMI, and may lack the

expertise and provider networks required for treating them appropriately. 28
Managed Care

Moreover, while managed care arrangements can provide greater flexibility in
the design and development of individualized services, capitated payment
arrangements create incentives to limit access and underserve enrollees.

In a previous study of Medicaid managed mental health care, we found that
HCFA had provided limited oversight of mental health managed care

26 A formulary is a list of drugs or classes of drugs a health care system
or other organization has identified as appropriate for treating patients.
27 Chris Koyanagi and Jennifer Stevenson, Assessing Approaches to Medicaid
Managed Behavioral Health Care, prepared by the Bazelon Center for Mental
Health Law

(Washington, D. C.: Kaiser Commission on the Future of Medicaid, July 1997).
28 This draft report was prepared for the Congress in response to the BBA
requirement that HCFA develop a set of safeguards for individuals with
special health needs who are enrolled in Medicaid managed care, including
persons with SMI. Pub. L. No. 105- 33, sec. 4705( c)( 2), 111 Stat. 251,
500.

carveouts. 29 Most monitoring occurred when the waiver application was made
or renewed, and it varied in content and intensity across HCFA's regional
offices. This stemmed in large part from a lack of central office guidance
on the type of program monitoring and oversight that HCFA staff should
perform. HCFA officials told us that the agency has recently revised the
monitoring guide that regional offices use when conducting site visits of
managed care programs, including those that provide services to people with
SMI. 30 In addition, SAMHSA now reviews all waiver applications to help HCFA
ensure that waiver applications appropriately address issues such as the
capacity of the proposed delivery system, the array of benefits covered, and
quality of care.

Recognizing the risks for vulnerable individuals with special health care
needs, the Congress in the BBA required HCFA to determine what safeguards
may be necessary to ensure that the needs of these individuals who are
enrolled in Medicaid managed care organizations are adequately met. HCFA's
draft report in response to its BBA mandate contains a series of
recommendations for HCFA, states, and managed care organizations regarding
safeguards to help ensure that adults with SMI obtain needed services. HCFA
recommends, for example, that states take steps to ensure that necessary
services and supports are reasonably available to beneficiaries whose
ability to function depends on receiving them. For example, HCFA suggests
that states require in their contracts that managed care organizations'
medical necessity decisions not always require improvement or restoration of
functioning but may also provide for services needed to maintain functioning
or compensate for loss of functioning. The draft indicates that HCFA intends
to develop plans to implement its recommended safeguards, such as through
legislative or regulatory action or changes in Medicaid administrative
policies. HCFA has taken comparable action to protect children with special
needs, another vulnerable population, when they are enrolled in state
Medicaid managed care programs. HCFA developed interim review criteria with
mandatory safeguards, which the agency plans to use to review state waiver
applications that include these children in managed care.

29 Medicaid Managed Care: Four States' Experiences With Mental Health
Carveout Programs (GAO/ HEHS- 99- 118, Sept. 17, 1999). 30 Although the
guide is in draft, it was distributed to HCFA regional offices in August
2000.

Concluding As people with SMI increasingly receive their care in the
community, it is

Observations important that they have access to the variety of mental health
and other

services they need. Because of the nature of SMI, people with this condition
are often poor and must rely on the public mental health system for their
care. Recently, states have stepped up their efforts to provide community-
based services that give ongoing support to adults with SMI. These services
are especially critical for people making the transition from institutions
to the community, to help prevent their becoming homeless or returning to
institutions. Homeless people with SMI especially need to receive a range of
mental health, substance abuse, social support, and housing services to
function in the community, and it is important for providers to link these
services effectively.

The use of managed mental health care by some state Medicaid programs has
resulted in the flexibility to provide a wider array of services. However,
given the potential for managed care providers reducing access to needed
services, it is important for HCFA and state Medicaid programs to ensure
that beneficiaries enrolled in managed care receive appropriate care. HCFA's
current effort to identify safeguards recognizes the importance of people
with SMI receiving the necessary services and continuity of care that are
fundamental to their well- being. The agency has indicated that it will
devise a set of actions to implement these recommended safeguards.
Identifying the appropriate actions and effectively implementing them will
be essential if the safeguards are to provide meaningful protection to this
vulnerable population.

Agency and Other We provided a draft of this report to SAMHSA and HCFA for
comment.

Comments SAMHSA generally agreed with the report's information on
communitybased

mental health services for people with SMI. SAMHSA noted two developments
that it considers importantï¿½an increase in the number of people with SMI who
are treated in the criminal justice system because of inadequate resources
for community mental health supports and states' support of consumer- run
services and increasing solicitation of consumers' views on the delivery of
community- based services. We did not evaluate the link between the number
of people with SMI treated in the criminal justice system and the adequacy
of community mental health resources or assess the participation of people
with SMI in the operation of community- based services. In its technical
comments, SAMHSA highlighted several efforts on which SAMHSA and HCFA work
collaboratively. For example, SAMHSA staff have accompanied HCFA staff on
site visits to monitor various states'

waiver programs, and a joint workgroup is developing indicators that states
can use to predict problems or ensure success in their managed care
programs.

In its comments on the draft report, HCFA summarized additional efforts by
the Medicaid and Medicare programs to serve the needs of people with SMI.
For example, HCFA has made grant money available for states to test
demonstration projects that focus on removing barriers to employment for
people with disabilities, including people with SMI. SAMHSA and HCFA
provided technical comments, which we incorporated where appropriate.
(SAMHSA's and HCFA's comments are in apps. VI and VII.)

We are sending copies of this report to the Honorable Donna E. Shalala,
Secretary of HHS; the Honorable Joseph Autry, Acting Administrator of
SAMHSA; the Honorable Robert A. Berenson, Acting Administrator of HCFA;
officials of the state mental health and Medicaid agencies we visited;
appropriate congressional committees; and others who are interested. We will
also make copies available to others on request.

If you or your staffs have any questions, please contact me at (202) 512-
7119. An additional GAO contact and the names of other staff who made major
contributions to this report are listed in appendix VIII.

Janet Heinrich, Director Health Careï¿½Public Health Issues

Appendi Appendi xes xI

Scope and Methodology To do our work, we interviewed officials at the Health
Care Financing Administration (HCFA), the Substance Abuse and Mental Health
Services Administration (SAMHSA), the National Institute of Mental Health
(NIMH), and the National Association of State Mental Health Program
Directors (NASMHPD), and we reviewed documents such as SAMHSA's National
Expenditures for Mental Health and Substance Abuse Treatment 1997, SAMHSA's
Center for Mental Health Services 1998 Survey of Mental Health Organizations
and General Hospitals with Separate Psychiatric Services, and NASMHPD
reports and data regarding the funding sources and expenditures of state
mental health agencies. Although other federal agencies, such as the
Department of Defense and the Veterans Administration, provide services to
people with mental illness, we generally restricted our scope at the federal
level to the Department of Health and Human Services (HHS) because HHS
programs account for most federal mental health spending.

We conducted site visits to Michigan and New Hampshire, where we interviewed
state mental health and Medicaid officials and administrators of selected
treatment programs. We selected these states for site visits because experts
identified them as implementing exemplary programs. We also reviewed several
states' Center for Mental Health Services monitoring reports, annual
implementation reports, and Community Mental Health Services Block Grant
applications.

We also reviewed relevant literature and obtained information from
individual experts as well as a number of organizations interested in mental
health issues such as the American Psychiatric Association (APA), the
American Psychological Association, the Bazelon Center for Mental Health
Law, the International Association of Psychosocial Rehabilitation Services,
the National Alliance for the Mentally Ill, the National Mental Health
Association, and the Treatment Advocacy Center.

We conducted our work between May and November 2000 in accordance with
generally accepted government auditing standards.

Appendi xII

Involuntary Outpatient Commitment Most states have laws authorizing
involuntary outpatient commitment, also referred to as mandatory or assisted
outpatient treatment. APA defines mandatory outpatient treatment as court-
ordered outpatient treatment for patients who suffer from severe mental
illness (SMI) and who are unlikely to comply with such treatment without a
court order. 1 APA considers this a preventive treatment for people who do
not meet criteria for inpatient commitment and who need treatment in order
to prevent relapse or deterioration that would predictably lead to their
meeting inpatient commitment criteria in the foreseeable future. Some states
have adopted standards for involuntary outpatient commitment that reflect
this approach, but most have adopted the criterion of individuals presenting
danger to themselves or others, the same standard they use for involuntary
inpatient commitment. Mandatory outpatient treatment may also be used as
part of a discharge plan for persons leaving inpatient facilities or as an
alternative to hospitalization.

Although 41 states and the District of Columbia have adopted involuntary
outpatient commitment laws, they are rarely used in many of these states.
The approach of using involuntary outpatient commitment has generated some
controversy. 2 People who support it believe that it helps ensure treatment
for people who need services but whose very illness prevents them from
recognizing their need, thus enabling them to remain in the community
instead of deteriorating in ways that could result in their being
institutionalized. Those who oppose it are concerned that it threatens civil
liberties, diverts scarce resources, and undermines the relationship between
people with mental illness and service providers. Some states have preferred
to take other approaches, such as the use of advance directives. These legal
documents allow individuals to express their choices about mental health
treatment or appoint someone to make mental health care decisions for them
in case they become incapable of making their own decisions.

1 APA, Mandatory Outpatient Treatment: A Resource Document of the American
Psychiatric Association( Washington, D. C.: 1999). 2 See also National
Health Policy Forum, “Outpatient Commitment in Mental Health: Is
Coercion the Price of Community Services?” Issue Brief 757
(Washington, D. C.: 2000).

Selected SAMHSA Efforts to Help the Implementation of Community- Based

Appendi xI II

Programs Program Description Funding

Community Action Grants for Awards community groups grants of less than
$150,000 to sponsor a best

$18.9 million over Services Systems Change practice targeted toward adults
with SMI or adolescents and children with serious

fiscal years 19972001 emotional disorders.

Employment Intervention An eight- site demonstration program to learn about
the most effective approaches

$15.5 million over Demonstration Program for helping adults with SMI find
and maintain competitive employment. fiscal years 19972001

Knowledge Exchange Network Uses various media to provide information about
mental health to users of mental $9. 3 million over

health services, their families, the general public, policymakers,
providers, and fiscal years 1997

researchers. 2001

National GAINS Center for A partnership with the National Institute of
Corrections, the Office of Justice

$4. 7 million, People with Co- Occurring

Programs, and the Office of Juvenile Justice and Delinquency Prevention,
this including $200,000

Disorders in the Justice program collects information about effective mental
health and substance abuse

from the System

services for people with co- occurring disorders who come in contact with
the Department of

justice system and disseminates it to states, localities, and criminal
justice and Justice, over fiscal

provider organizations. Its goals include assessing which services work for
which years 1995- 2000

people, interpreting information, putting it into a useful form, and
stimulating the use and application of information.

Center for Mental Health A nine- site program to examine the relative
effectiveness of pre- and post- booking

$11 million over Services' Jail Diversion

diversion to community- based services for people with mental illness and
fiscal years 1998 Program

substance abuse disorders in the justice system. 2001 Access to Community
Care

A demonstration program that is testing the hypothesis that integrating $93
million over and Effective Services and

fragmented service systems will substantially help end homelessness among
fiscal years 1994 Support Program

people with SMI. 2000 Projects for Assistance in

Annual formula grant that provides states and territories with a flexible
funding $31 million in fiscal

Transition From Homelessness source specifically to serve homeless
individuals with SMI, including those with year 2000

substance abuse problems. The program is designed to provide services that
will enable homeless people with a mental disorder to find appropriate
housing and mental health treatment.

Consumer- Operated Services Eight- site program to evaluate the extent to
which services operated by people

$19.6 million over Program with SMI are effective in improving outcomes of
adults with SMI when used as an

fiscal years 1998 adjunct to traditional mental health services.

2001

Selected Community- Based Approaches to

Appendi xI V

Treating People With Serious Mental Illness The development of varied
community- based treatment models has increased the ability to meet the
complex needs of adults with SMI. Following are descriptions of several
approaches and examples of how they are implemented in New Hampshire and
Michigan.

Assertive Community Assertive community treatment (ACT) is designed to
provide

Treatment comprehensive community- based services to people with SMI. ACT is

intended for people with the most severe and persistent illnesses, including
schizophrenia and bipolar disorders. It is also appropriate for persons who
are significantly disabled by other disorders and have not been helped by
traditional mental health services. Experts report that ACT is a good
approach for people with SMI who have recently left institutions, typically
do not schedule or keep appointments, or do not do well without a lot of
support. ACT programs use a variety of treatment and rehabilitation
practices, including medications; behaviorally oriented skill teaching;
crisis intervention; support, education, and skill teaching for family
members; supportive therapy; cognitive- behavioral therapy; group treatment;
and supported employment.

Under the ACT model, services are delivered by a mobile, multidisciplinary
treatment team. Unlike traditional case management, in which the case
manager often brokers services that others provide, the ACT staff are to
work as a team to provide services directly. These services are to be
available 24 hours a day, 365 days a year. The majority of ACT services are
to be provided in the community, including the person's home, employment
site, or places of recreation rather than in an office setting. The
treatment team is to adapt and individually tailor interventions to meet the
specific needs of the person with SMI rather than requiring the person to
adapt to the team or the rules of a treatment program. Under the ACT model,
services are to be designed to continue indefinitely, as needed.

In order to provide the type and intensity of services required, ACT, as a
program model, has a number of staffing requirements. First, the ACT team
typically includes 10 to 12 mental health professionals, depending on the
number needed to be able to provide services around the clock. All teams
have a full- time leader or supervisor, a psychiatrist, a peer specialist,
and a program assistant. ACT programs are designed to have a ratio of no
more than 10 clients for each staff person, not counting the psychiatrist
and program assistant. As a result, the typical maximum caseload is 120 for
urban teams and 80 for rural teams.

A provider we visited in New Hampshire operates three types of ACT teams.
Two of these teams, one of which works exclusively with people who have both
mental illness and a substance abuse disorder, are designed for people with
SMI who generally reject treatment and need care available to them around
the clock. These teams do not routinely operate in the evenings or on
weekends, but staff are on call at all times. People are moved from these
programs as their need for intensive services decreases, partly because the
programs are very expensive to operate. The third team operates during
normal business hours and is designed for individuals who have been
institutionalized but accept treatment and do not require 24- hour care.

Michigan offers ACT services statewide. Its program delivers a comprehensive
set of treatment, rehabilitation, and support services to persons with SMI
through a team- based outreach approach. A provider we visited in Michigan
offers ACT services to persons who have been repeatedly hospitalized and who
have failed to become stabilized on their medications. The provider
generally does not offer ACT services until less intensive services have
been tried and have failed. After 15 years of operation, about 65 to 70
percent of the original participants continue to receive ACT services.

Studies have found that ACT may be associated with reduced hospital
admissions, shorter hospital stays, better social functioning, greater
housing stability, fewer days homeless, and fewer symptoms of thought
disorder and unusual activity. 1 Studies have also found that ACT services

1 Anthony F. Lehman and others, “Cost Effectiveness of Assertive
Community Treatment for Homeless Persons With Severe Mental Illness,”
British Journal of Psychiatry, Vol. 174 (1999), pp. 346- 52. Anthony F.
Lehman and others, “A Randomized Trial of Assertive Community
Treatment for Homeless Persons with Severe Mental Illness,”
presentation at the Annual Meeting of the American Psychiatric Association
(Miami, Fla.: May 1995). Gary Morse and others, “An Experimental
Comparison of Three Types of Case Management for Homeless Mentally Ill
Persons,” Psychiatric Services, Vol. 48, No. 4 (1997), pp. 497- 503.
Jerry Dincin and others, “Impact of Assertive Community Treatment on
the Use of State Hospital Inpatient Bed- Days ,” Hospital and
Community Psychiatry, Vol. 44, No. 9 (1993), pp. 833- 38. Gary R. Bond and
others, “Assertive Community Treatment for Frequent Users of
Psychiatric Hospitals in a Large City: A Controlled Study,” American
Journal of Community Psychology, Vol. 18, No. 6 (1990), pp. 865- 87.

cost less than other services, especially inpatient and emergency room care.
2

Supported Supported employment is an approach to help people with SMI
succeed in

Employment regular work settings by providing them ongoing training and
support as

needed. In supported employment, participants generally earn money for their
work (usually at the prevailing wage) and work as regular employees
alongside nondisabled employees (not segregated with other employees with
disabilities, either mental or physical).

Individual Placement and Support (IPS), the most studied supported
employment approach, focuses on finding adults paid work in regular work
settings and providing them training and support as long as necessary after
placement, in contrast to more traditional approaches that provide testing,
counseling, training, and trial work experiences before they seek
competitive employment. IPS focuses on integrating clinical and vocational
services, performing minimal preliminary assessments, conducting rapid job
searches, matching people with jobs of their choice, and providing ongoing
supports, such as helping with transportation or finding a substitute for
the position if the person is having trouble with illness symptoms. Studies
have found that participants in IPS programs have had higher employment
rates than people involved in traditional programs. For example, an early
study of IPS found that 56 percent of IPS participants had competitive jobs
during their first year in the program, compared with 9 percent of those who
stayed in a day treatment program that emphasized skills training groups,
socialization groups, and sheltered work within the mental health center. 3

The provider we visited in New Hampshire began offering IPS in 1995 because
staff found it was effective at getting persons with SMI back to work.
Further, they had earlier found that participants were not able to apply the
skills learned in the provider's prior sheltered vocational training program
to jobs outside that sheltered environment. The provider serves

2 Anthony F. Lehman and others, “Cost Effectiveness of Assertive
Community Treatment for Homeless Persons With Severe Mental Illness.”
Daniel Chandler and others, “Cost Effectiveness of a Capitated
Assertive Community Treatment Program,” Psychiatric Rehabilitation
Journal, Vol. 22, No. 4 (1999), pp. 327- 36.

3 Robert E. Drake and others, “Rehabilitative Day Treatment vs.
Supported Employment: I. Vocational Outcomes,” Community Mental Health
Journal, Vol. 30, No. 5 (1994), pp. 519- 32.

225 people at a time in its IPS program and told us that about half of those
have jobs at any given time.

Supportive Housing Supportive housing addresses the needs of people with SMI
who are homeless or at risk of becoming homeless. This approach combines

housing with access to services and supports, such as case management
services, substance abuse treatment, employment assistance, and daily living
supports. Supportive housing refers to a range of housing interventions that
can be transitional or permanent. Transitional housing is typically group
housing, where the person can live for a predetermined period of time, with
services and supports provided on- site. Permanent supportive housing, which
includes single room occupancy hotels and apartments, has no predetermined
time limits and generally includes access to services in the community.
There appears to be no single housing model that is most effective for
people with SMI. Experts have stated that linking housing and supportive
services is crucial for helping people with SMI live independently and that,
because of the varying needs of people with SMI who are homeless, a range of
housing and service options is necessary.

Selected HUD Programs That Can Assist

Appendi xV

Homeless People Who Have SMI Program Description Funding

Section 8 Rental Certificate and Provides rental assistance to very low-
income families,

$10 billion in fiscal year 1999 Voucher Program elderly persons, and
disabled persons for decent, safe, and

sanitary housing in the private market. Single Room Occupancy Program
Provides rental assistance to homeless individuals to obtain

$17 million in fiscal year 1999 permanent housing in single- room occupancy
units. Shelter Plus Care Provides rental assistance, together with
supportive services

$152 million in fiscal year 1999 funded from other federal, state, local,
and private sources, to homeless people with disabilities. Program grants
provide rental assistance payments through (1) tenant- based rental
assistance, (2) sponsor- based rental assistance, (3) building owner- based
rental assistance, or (4) single room occupancy assistance.

Supportive Housing Program Provides grants to states, local governmental
entities, private $581 million in fiscal year 1999

nonprofit organizations, and community mental health associations to develop
supportive housing and supportive services to assist homeless persons in the
transition from homelessness and to enable them to live as independently as
possible. Program funds may provide (1) transitional housing, (2) permanent
housing for homeless persons with disabilities, (3) supportive services for
homeless persons not living in supportive housing, (4) housing that is, or
is a part of, an innovative development of alternative methods designed to
meet the long- term needs of homeless persons, and (5) safe havens. a

a Safe havens are designed to provide safe residences for homeless people
with SMI who are living on the street and unwilling or unable to participate
in mental health or substance abuse treatment programs or to receive support
services. Safe havens are intended to reach homeless people who are
suspicious or afraid of more structured supportive housing.

Comments From the Substance Abuse and

Appendi xVI Mental Health Services Administration

Comments From the Health Care Financing

Appendi xVII Administration

Appendi xVI II

GAO Contact and Staff Acknowledgments GAO Contact Helene F. Toiv, (202) 512-
7162 Staff

Other major contributors to this report were Renalyn Cuadro, Nila
GarcesOsorio, Acknowledgments

Brenda R. James, Janina R. Johnson, Carolyn Feis Korman, and Craig Winslow.

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GAO United States General Accounting Office

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Appendix I

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Appendix II

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Appendix III

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Appendix IV

Appendix IV Selected Community- Based Approaches to Treating People With
Serious Mental Illness

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Appendix IV Selected Community- Based Approaches to Treating People With
Serious Mental Illness

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Appendix IV Selected Community- Based Approaches to Treating People With
Serious Mental Illness

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Appendix V

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Appendix VI

Appendix VI Comments From the Substance Abuse and Mental Health Services
Administration

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Appendix VII

Appendix VII Comments From the Health Care Financing Administration

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Appendix VII Comments From the Health Care Financing Administration

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Appendix VIII

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Official Business Penalty for Private Use $300

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