THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, December 24, 1994 TAG: 9412240300
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARIE JOYCE, STAFF WRITER
LENGTH: Medium: 53 lines
Options Mental Health will get a $30 million holiday present from the state of Nebraska.
The company, a division of Norfolk-based First Hospital Corp., learned Friday that it was selected to manage mental health services for all Nebraska's Medicaid recipients.
Although final details must be worked out, company officials say the deal likely will bring in more than $30 million a year, making it the company's largest single contract in terms of annual revenue. It will also be one of the largest contracts overall for First Hospital, which, in addition to its Options plan, owns mental health and addiction treatment centers around the country.
In return, Nebraska will get a new kind of mental health service, company officials say - one that uses managed care techniques to run more efficiently.
The service will cover all of Nebraska's 90,000 people on Medicaid, the government program that provides health benefits for the poor.
The new program is capitated, meaning Options is paid a fixed amount for each person in the plan and assumes the risk for keeping costs below that.
Options faces some challenges, said Vice President David Hunsaker, since the Medicaid population tends to have a high percentage of seriously mentally ill people, so the cost of caring for them is greater than for people on commercial insurance.
The company plans broad changes in the way mental health is delivered to the poor, Hunsaker says. These include setting new reimbursement rates for health care workers. The rate is often too low, discouraging them from taking on Medicaid patients, Hunsaker says.
He said that Options also will work with community organizations that traditionally don't get reimbursed by Medicaid.
The new contract will mean few new jobs in Hampton Roads, he said, although the company may need to hire some people here to help with claims and related tasks.
The bulk of the new jobs will be in Nebraska, where Options plans to establish an office.
``This will not be a 1-800 operation that's answered from afar,'' Hunsaker said.
Nebraska awarded contracts for handling other aspects of Medicaid care to several other companies, including Maximus of McLean, Va. by CNB