Setting Rates for Medicaid Managed Behavioral Health Care: Lessons Learned

Reviews Tennessee's experience setting, monitoring, and updating capitation rates for Medicaid managed behavioral health care and draws lessons for other states. Finds that the initial behavioral health rate was inadequate, primarily because of the way available information was used, rather than the rate-setting method itself. Notes that other states should anticipate and act to offset data problems when setting rates, whether by looking to alternative data sources or implementing program "safety valves" to protect the state, plans, and beneficiaries from the adverse effects of using incomplete data to set rates.