Magellan Behavioral Health and State of Montana Reach Agreement On Termination of Mental Health Contract.

COLUMBIA, Md. and HELENA, Mont.--(BW HealthWire)--March 26, 1999--

Magellan to Cease Montana Operations as of June 30, 1999

Magellan Behavioral Health and the State of Montana announced today that they have reached an agreement in principle on the termination of Magellan's contract to manage the State's Mental Health Access Plan.

Under the agreement, the State of Montana will assume financial risk for health care services provided through the program beginning May 1, 1999, and Magellan will cease all operations associated with the contract as of June 30, 1999. Magellan will continue to provide care management services and pay claims through June 30, 1999.

The agreement is the result of negotiations between Magellan and the Department of Public Health and Human Services (DPHHS) which began earlier this month when Magellan gave notice to terminate the contract.

Additionally, the $12.8 million in restricted funds, a contractual requirement funded by the original contractor and held in reserve by DPHHS, will be used to pay for services prior to May 1, 1999. Magellan will retain all liability for claims for service prior to May 1.

Magellan also has agreed to cooperate with the State as it works with the federal Health Care Financing Administration to alter its Medicaid waiver for mental health services. The State is planning to initiate a region-based mental health system in the coming year.

"With a great deal of hard work on both sides and the leadership of Governor Racicot, we have forged an agreement that will effect Magellan's exit from the contract in a professional manner and one that considers the best interests of consumers and their families," said C. Richard Orndoff, chief operating officer of Magellan Behavioral Health's Public Solutions Group. "We have worked hard over the last year to propose solutions to the challenges presented by this ambitious program. We realize, however, that this outcome, while unfortunate, is inevitable, given current resistance to making significant program changes. Nonetheless, we are committed to fulfilling our obligations in serving MHAP members through June 30th."

The Montana Mental Health Access Plan, which began in April 1997, provides mental health care for Medicaid recipients and uninsured state residents. Magellan Behavioral Health took over management of the program in early 1998 as a result of its acquisition of Merit Behavioral Care. Merit had assumed management of the program through its acquisition of the original contractor, CMG Health.

Magellan Behavioral Health is the country's largest and most comprehensive behavioral health, employee assistance program and human services organization, serving more than 64 million individuals across the United States and Canada, including more than 3 million through public sector programs such as Montana's.

The company specializes in managed mental health and substance abuse services as well as employee assistance/work-life programs, and serves over 3,000 client organizations representing health plans, government agencies, unions, and corporations. Its parent organization, Magellan Health Services, is the country's leading specialty managed care organization.