Substance Abuse and Mental Health: Reauthorization Issues Facing the
Substance Abuse and Mental Health Services Administration (Testimony,
05/22/97, GAO/T-HEHS-97-135).

GAO discussed the Substance Abuse and Mental Health Services
Administration's (SAMHSA) role in: (1) coordinating its efforts with
federal agencies involved in related research or services; (2) measuring
the results of its programs or activities, particularly in light of the
fact that most of its funds are used to support services provided by
states and local grantees; and (3) monitoring the impact of the
transition to managed health care on individuals with mental disorders
and substance abuse problems.

GAO noted that: (1) SAMHSA faces three important challenges in the
current environment; (2) given the many different, yet related, federal
agency activities in the areas of substance abuse and mental health, it
is especially important that SAMHSA communicate and coordinate its
efforts with agencies involved in similar or complementary activities;
(3) under the Government Performance and Results Act, SAMHSA will have
to show that its funds are used efficiently and effectively; (4) this
will present a particular challenge for the agency because most of its
funds are used to support services provided by states and local
grantees; (5) the move to managed care in the private and public sectors
affords potential opportunities to improve the coordination of care, yet
it has risks given the financial pressures to control costs and health
plans limited experience in setting capitation rates for mental health
and substance abuse services; and (6) these are issues that deserve
SAMHSA's careful attention.

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

 REPORTNUM:  T-HEHS-97-135
     TITLE:  Substance Abuse and Mental Health: Reauthorization Issues 
             Facing the Substance Abuse and Mental Health
             Services Administration
      DATE:  05/22/97
   SUBJECT:  Accountability
             Alcohol abuse
             Alcoholics treatment
             Drug abuse
             Drug treatment
             Block grants
             Interagency relations
             Mental health care services
             Strategic planning
             Managed health care
IDENTIFIER:  HHS Knowledge Development and Application Program
             Performance Partnership Grant
             Medicaid Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Public Health and Safety, Committee on
Labor and Human Resources, U.S.  Senate

For Release on Delivery
Expected at 9:30 a.m.
Thursday, May 22, 1997

SUBSTANCE ABUSE AND MENTAL HEALTH
- REAUTHORIZATION ISSUES FACING
THE SUBSTANCE ABUSE AND MENTAL
HEALTH SERVICES ADMINISTRATION

Statement of Marsha Lillie-Blanton, Associate Director
Health Services Quality and Public Health Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-135

GAO/HEHS-97-135T


(108332)


Abbreviations
=============================================================== ABBREV

  ADAMHA - Alcohol, Drug Abuse, and Mental Health Administration
  GPRA - Government Performance and Results Act
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services
  IHS - Indian Health Service
  KDA - Knowledge Development and Application
  NIAAA - National Institute on Alcohol Abuse and Alcoholism
  NIDA - National Institute on Drug Abuse
  NIH - National Institutes of Health
  ONDCP - Office of National Drug Control Policy
  OMB - Office of Management and Buget
  PPG - Performance Partnership Grants
  SAMHSA - Substance Abuse and Mental Health Services Administration

SUBSTANCE ABUSE AND MENTAL HEALTH: 
REAUTHORIZATION ISSUES FACING THE
SUBSTANCE ABUSE AND MENTAL HEALTH
SERVICES ADMINISTRATION
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to assist the Subcommittee in its
deliberations on the reauthorization of the Substance Abuse and
Mental Health Services Administration (SAMHSA).  SAMHSA, with an
operating budget of $1.9 billion in fiscal year 1996, is the
Department of Health and Human Services' (HHS) lead agency for
substance abuse and mental illness prevention and treatment.  The
work of this agency has been deemed critically important to our
nation's efforts to address and reduce the problems related to
substance abuse and mental disorders.  My testimony today focuses on
SAMHSA's role in (1) coordinating its efforts with federal agencies
involved in related research or services; (2) measuring the results
of its programs or activities, particularly in light of the fact that
most of its funds are used to support services provided by States and
by local grantees; and (3) monitoring the impact of the transition to
managed health care on individuals with mental disorders and
substance abuse problems. 

The observations I present today are based on our past and ongoing
work at HHS as well as on conversations with SAMHSA officials and
officials at other agencies that are engaged in substance abuse and
mental health-related activities. 

In summary, SAMHSA faces three important challenges in the current
environment.  First, given the many different, yet related, federal
agency activities in the areas of substance abuse and mental health,
it is especially important that SAMHSA communicate and coordinate its
efforts with agencies involved in similar or complementary
activities.  Second, under the Government Performance and Results Act
(GPRA), SAMHSA will have to show that its funds are used efficiently
and effectively.  This will present a particular challenge for the
agency because most of its funds are used to support services
provided by states and local grantees.  Finally, the move to managed
care in the private and public sectors affords potential
opportunities for SAMHSA to improve the coordination of care, yet it
has risks, given the financial pressures to control costs and health
plans limited experience in setting capitation rates for mental
health and substance abuse services.  These are issues that deserve
SAMHSA's careful attention. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

It is estimated that 52 million Americans annually experience a
mental health or substance abuse problem and about half obtain
treatment.\1 Many factors, including perceptions of the need for
treatment, account for many people not getting care.  In addition,
insurance coverage has generally been more limited for mental health
than for physical health services.  For this reason, public sector
(federal and state) resources have provided an important safety net
for individuals unable to afford the care available in the private
sector, and we now have a sizable public sector investment in mental
health and substance abuse services.  Private sector resources (for
example, managed behavioral health plans) have grown, however,
particularly as more employers have offered mental health and
substance abuse benefits.  Nonetheless, many Americans continue to
face barriers in obtaining access to mental health and substance
abuse services. 

In October 1992, the Congress established SAMHSA under Public Law
102-321 to strengthen the nation's health care delivery system for
prevention and treatment of substance abuse and mental illnesses. 
Before 1992, the major federal substance abuse and mental health
delivery services and research activities were combined under one
agency, the Alcohol, Drug Abuse, and Mental Health Administration
(ADAMHA).  In the 1992 legislation, the Congress created SAMHSA to
administer the services portion of ADAMHA and transferred its
research components to the National Institutes of Health (NIH) to be
carried out by the National Institute on Alcohol Abuse and Alcoholism
(NIAAA), the National Institute on Drug Abuse (NIDA), and the
National Institute of Mental Health. 

Since 1992, SAMHSA's budget has remained relatively stable at about
$2 billion each year.  Most of this amount has been in the form of
block grants to states and local governments.  In fiscal year 1996,
these grants totaled $1.2 billion for substance abuse prevention and
treatment services and $275 million for mental health services. 
Combined, these block grants accounted for about 80 percent of
SAMHSA's budget (see fig.  1).  These funds go directly to states and
local organizations, which have broad discretion in how best to use
them, within federal guidelines.  The remainder of SAMHSA's
budget--$376 million in fiscal year 1996--supports program
management; data collection, analysis, and dissemination; and a wide
array of demonstration efforts through the Knowledge Development and
Application (KDA) program.  The KDA program, as described in HHS'
fiscal year 1998 budget, supports community organizations and other
grantees with funding for well-defined demonstrations and other
efforts that help promote strategies to reduce drug use by youth and
increase the knowledge base about issues such as managed care and
early childhood problems. 

   Figure 1:  Amount of SAMHSA's
   Total Budget Authority Devoted
   to Block Grants, Fiscal Years
   1993-96

   (See figure in printed
   edition.)

Most of SAMHSA's $1.9 billion budget--75 percent in fiscal year 1996,
or $1.4 billion--funded substance abuse prevention and treatment
services.  SAMHSA's drug abuse budget authority, although sizable,
represented only about one quarter of the federal government's drug
abuse prevention and treatment budget in fiscal year 1996 (see fig. 
2).\2 The Department of Veterans Affairs devoted a similar level of
resources, while the Department of Education, the next largest
supporter of these services, provided about half the level of funding
of the other two agencies.  Over a dozen other agencies with varying
roles and responsibilities share in funding similar or related
activities under their respective missions, goals, and objectives.\3

   Figure 2:  Agencies' Share of
   Federal Funding for Drug Abuse
   Prevention and Treatment,
   Fiscal Year 1996

   (See figure in printed
   edition.)

Notes:  Total funding is $4.4 billion.  Funding for alcohol-only
prevention and treatment programs is not included. 

\a Other agencies include the Departments of Defense, Justice, and
Labor. 

Source:  ONDCP, The National Drug Control Strategy, 1997:  FY 1998
Budget Summary, (Washington, D.C.:  ONDCP, Feb.  1997). 


--------------------
\1 Institute of Medicine, National Academy of Sciences, Managing
Managed Care:  Quality Improvement in Behavioral Health (Washington,
D.C.:  National Academy of Sciences, 1997). 

\2 The federal government's drug abuse prevention and treatment
budget is prepared by the Office of National Drug Control Policy
(ONDCP).  SAMHSA's budget authority in ONDCP's budget is $1.084
billion for fiscal year 1996.  This amount excludes SAMHSA funding
for alcohol-only programs. 

\3 Drug and Alcohol Abuse:  Billions Spent Annually for Treatment and
Prevention Activities (GAO/HEHS-97-12, Oct.  8, 1996). 


   COORDINATION IS IMPORTANT TO
   PROGRAM RESULTS AND MORE
   EFFICIENT USE OF FEDERAL FUNDS
---------------------------------------------------------- Chapter 0:2

Given the number of federal agencies with related responsibilities in
the area of mental health and substance abuse services, SAMHSA is
presented with a particular challenge as well as an opportunity to
coordinate activities and promote the development of effective
linkages.  While we recognize that ONDCP has lead responsibility for
coordinating federal drug abuse supply and demand reduction
activities, SAMHSA, nevertheless, has responsibility for coordinating
its efforts with agencies involved in similar or complementary
activities. 

The relationship between SAMHSA and the NIH institutes that once were
a part of ADAMHA is an important partnership to maintain.  The NIH
research institutes support the development of new knowledge and
technologies in prevention and treatment of substance abuse and
mental illness.  Linkages between researchers and practitioners are
critical for new research initiatives to be grounded in real world
problems and for new programmatic initiatives to reflect current
knowledge in the field.  Since one of SAMHSA's major goals is to
support the application of innovative treatment and prevention
approaches, working with the research institutes to identify projects
that could serve as models for innovation is very important.  There
are probably many such opportunities for collaboration across
agencies. 

SAMHSA also has the opportunity to work with agencies such as the
Departments of Veterans Affairs and Justice that serve populations in
which mental health and substance abuse problems are great.  Despite
the value of such relationships, we found that in the past, SAMHSA,
along with NIDA and NIAAA, had no process to link its expertise with
that of the Indian Health Service (IHS),\4 an agency that serves a
population in which abuse of alcohol and other substances is a major
problem.  We recommended that IHS and the other HHS agencies work
together to develop a plan to address substance abuse-related
problems among Indian populations.  In 1996, HHS developed and
implemented such a plan, which should help it strategically allocate
limited federal resources to address a major public health problem in
IHS service areas. 


--------------------
\4 Indian Health Service:  Basic Services Mostly Available: 
Substance Abuse Problems Need Attention (GAO/HRD-93-48, Apr.  9,
1993). 


   EMPHASIS ON ACCOUNTABILITY FOR
   MEETING PROGRAM GOALS IS
   ESSENTIAL
---------------------------------------------------------- Chapter 0:3

Another major challenge for SAMHSA is to measure how well its
programs are working.  Given that most of SAMHSA's dollars are
distributed to states through its block grant program, the agency
faces the additional challenge of balancing the flexibility it
affords states to set priorities on the basis of local need against
its own need to hold the states accountable for achieving SAMHSA's
goals.  While this may have always been a daunting task, the passage
of GPRA in 1993 now requires SAMHSA, along with other federal
agencies, to show that the use of their funds is yielding results.\5

Under GPRA, every major federal agency--and, in many cases,
organizations within each agency--must now answer some basic
questions:  What is our mission?  What are our goals, and how will we
achieve them?  How can we measure our performance?  How will we use
performance information to improve?  GPRA forces federal agencies to
shift their focus from such traditional concerns as staffing and
activity levels to a single overriding concern:  results. 

Specifically, GPRA directs agencies to consult with the Congress,
obtain the views of other stakeholders, and clearly define their
missions.  It also requires agencies to establish long-term strategic
goals as well as annual goals linked to the strategic goals. 
Agencies must then measure their performance according to their goals
and report to the President and the Congress on their success.  In
addition to ongoing performance monitoring, agencies are expected to
identify performance gaps in their programs and to use information
from these evaluations to improve programs.\6

GPRA requires that federal agencies develop strategic plans for a
period of at least 5 years and submit them to the Congress and the
Office of Management and Budget (OMB) no later than September 30,
1997.  These plans must identify the agencies' long-term strategic
goals and describe how the agencies intend to meet these goals
through their activities and resources.  GPRA also requires agencies
to submit an annual performance plan to OMB that links the strategic
goals in their plan to managers' and employees' daily activities. 
This plan should include the annual performance goals for the
agencies' programs as listed in their budget, a summary of the
resources to conduct these activities, the performance measures that
will gauge the progress toward those goals, and a discussion of how
the performance information will be verified. 

Recognizing this challenge, HHS is transforming its SAMHSA block
grants into Performance Partnership Grants (PPG).  Under PPG, an
arrangement between the state and federal governments will be
negotiated that identifies specific objectives and performance
measures in terms of outcomes, processes, and their capacity to be
achieved over 3 to 5 years.  This appears to be a promising strategy
because it gives states greater control over their funding decisions
while encouraging them to accept greater accountability for results. 

One of the many difficulties in implementing PPGs, however, will be
developing and reaching agreement with individual states on their
measures of performance.  A panel of experts, convened by the
National Research Council at the request of HHS, was asked to
recommend a set of performance measures for ten public health areas
of concern that states and the federal government could use to
negotiate PPG agreements and monitor performance.  Included in these
areas of concern are substance abuse, mental health, chronic disease,
and sexually transmitted diseases.  The panel's final report on this
first phase of its work is expected to be released by mid-June 1997. 
A final report on the second phase of the study, which will include
recommendations for improving state and federal surveys and data
systems, is expected to be released by the end of calendar year 1998. 
Consequently, implementation of PPGs will occur later than fiscal
year 1998, as earlier projected. 


--------------------
\5 Managing for Results:  Using GPRA to Assist Congressional and
Executive Branch Decisionmaking (GAO/T-GGD-97-43, Feb.  12, 1997). 

\6 Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996) and Managing
for Results:  Using GPRA to Assist Congressional and Executive Branch
Decisionmaking (GAO/T-GGD-97-43, Feb.  12, 1997). 


   ISSUES IN THE TRANSITION TO
   MANAGED BEHAVIORAL HEALTH CARE
---------------------------------------------------------- Chapter 0:4

Another challenge facing SAMHSA is its role in restructuring public
sector mental health and substance abuse services, given the growth
of the private sector managed behavioral health care industry.  The
forces driving the move to managed care for physical health services
are also in operation in the mental health specialty sector. 
Employers' concerns about the high costs of mental health and
substance abuse services have prompted them to adopt a number of
managed care strategies.  According to HHS, about 60 percent of
Americans with private insurance were enrolled in a managed
behavioral health plan in 1995.  Similarly, the public sector,
through the Medicaid program--which is administered by the Health
Care Financing Administration (HCFA)--has looked to managed care to
improve access to a comprehensive range of services while also
reducing costs.  As states have enrolled increasing numbers of
Medicaid beneficiaries in managed care plans, they have found
themselves having to make choices about payment and care arrangements
for mental health services.  While some states are integrating
behavioral health and physical health services into a single managed
care program, others are either fully or partially carving out mental
health benefit packages under separate contractual arrangements. 

The move to managed care, particularly when driven by pressures to
control costs, has raised concerns about access to and quality of
mental health and substance abuse care.  Managed care has the
potential to improve access to a comprehensive range of benefits for
a population with multiple and chronic behavioral health care needs;
yet it also has risks, given financial incentives to limit costs and
the health care system's limited experience in setting capitation
rates for services needed by this population.  People with mental
health and substance abuse problems may need a combination of
different types of care, such as outpatient services, inpatient
hospital care, and long-term institutional or residential care. 
SAMHSA has established an Office of Managed Care, which funds a
project that is monitoring the impact of the transition to managed
care on public mental health and substance abuse providers and the
people served.  In addition, SAMHSA is supporting a number of managed
care policy and demonstration grants that focus on specific issues or
populations, such as people who are homeless or seriously mentally
ill or who live in rural communities.  Knowledge gained through these
efforts should be useful in working with HCFA to develop oversight
and performance standards for Medicaid's move to mental health
managed care.  Given the major transitions occurring in health care
delivery and financing of physical and mental health services, it
will be important for SAMHSA to continue to give attention to
developments in the field. 


-------------------------------------------------------- Chapter 0:4.1

Mr.  Chairman this concludes my statement.  I will be pleased to
answer any questions you or Members of the Subcommittee might have. 


   CONTRIBUTORS
---------------------------------------------------------- Chapter 0:5

For more information on this testimony, please call Bernice
Steinhardt, Director, Health Services Quality and Public Health,
(202) 512-7119. 

*** End of document. ***