The program will combine $300 million to $350 million for services that range from Medicaid and indigent care for adults and children to community correctional programs. All told, the program will cover about 60,000 New Mexicans. A tight budget and demand for coordinated services prompted state officials to embark on the ambitious restructuring in 2003.

With only a couple of months for the state and its managed care contractor to prepare for the system change, many throughout the state are hoping for the best. “This is probably one of the more ambitious projects going on in the nation,” William C. Daumueller, president of the New Mexico Behavioral Health Providers Association, told NC News. “We’re not a big state, but when you look at all the things that are being rolled into one contract, it’s a huge, massive restructuring and change in the way business has been done over the past years.”

If the program is successful, other states might consider the approach as a way to achieve economies of scale, Daumueller said. But if it falls under its own weight, other states would probably want to avoid it.

State officials announced the choice of ValueOptions as the program’s manager on April 1. “From the very beginning of this redesign process, the Collaborative was clear that we were looking for a true partner in streamlining behavioral health services, and I believe we’ve found that with ValueOptions,” Pamela Hyde, Secretary of the state’s Department of Human Services, said when announcing the decision.

ValueOptions has had prior experience in New Mexico as the manager of one of three Medicaid behavioral health programs integrated with physical health. (Federal Medicaid officials pulled the plug on the three-year-old carve-in program in 2000.) The company also has experience managing programs in Colorado, Maricopa County, Ariz., and Dallas-Forth Worth. The new program holds plenty of potential for coordination of services and better utilization of funding, Daumueller said. But that change won’t come with additional funding, and that could be something of a challenge.

“We’re all a little apprehensive,” said Daumueller, who is CEO of Southwest Counseling Center and on the board of directors for the provider-sponsored network Rio Grande Behavioral Health.

Another fear that CMHCs have is the possibility of the state moving to a strict fee-for-service system, he said. Providers are hoping that the program will embrace more innovative and flexible forms of payment, such as case rates and other forms of capitation, and will make use of provider-sponsored networks.

The program’s primary objective in the first year is to get a handle on processing data and making sure that providers get paid. “The main goal is not to mess anything up — to make sure providers get paid and consumers don’t fall through the cracks,” said Daumueller.

The change means that about 85 percent of community providers’ budgets will come from one payor source. The scariest part involves services for the indigent, which will receive flat funding for several years.

“Hopefully our expectations won’t outrun our funding, because we’re talking about a lot of consumer choice, but there’s no extra money,” he said. Adding providers to the system to offer consumers more choice means money will be taken away from the system’s existing providers and that could be troublesome.

One of the reasons the state is going to the new system is to better utilize the funding they do have by reducing fragmentation. And hopefully that will be the outcome, Daumueller said. “I think we’re all on the same side as far as wanting this thing to work.”

Daumueller said the state’s decision to focus on getting providers paid is an important one. He expects that the program will find a way to approximate what people have been paid in the past, even if it eventually goes to a fee-for-service system, just to get money to providers. “Otherwise there’s going to be a lot of cash flow problems throughout the state,” he said. Many providers don’t have six months of revenue to live on. A significant shortfall of cash for two or three months would hurt a lot of them and put some of them out of business.

Providers also wonder whether they will eventually have to change information systems. For Medicaid, it appears they will be able to submit standard billing forms. But questions remain about reporting non-Medicaid services. A lot of things need to happen between now and June 30, such as developing contracts with all the providers across state. “It’s a huge undertaking,” Daumueller commented.

A lot of good philosophy went into designing the program, which is oriented toward recovery and resilience, but the transition to the new system will need to be done in an orderly fashion so it doesn’t implode under the weight of the start-up, which will be considerable.

It appears state officials chose the best proposal in selecting ValueOptions. Most attractive to CMHCS is the managed care company’s history of forming partnerships with providers, as they’ve done most notably in Colorado. They’ve also selected local people with strong experience in New Mexico to run the program. For instance, Pam Galbraith, the program’s CEO for ValueOptions, is currently the administrator for Behavioral Health Hospitals and Programs at the University of New Mexico Health Services and has worked in the university’s health system for 33 years.

As with any managed care program, however, the proof is in the pudding, Daumueller said. “It remains to be seen how well we all do our jobs.”

Providers in the state are already working to become more quality oriented by reducing paperwork, focusing on no-shows and becoming more productive — all changes that are essential under any system.

Daumueller has advice for providers: “Run quality services, be productive and efficient, stay consumer-oriented, be flexible and take the recovery model to heart. If we all do those things, regardless of whatever else happens, we’ll be in better shape to survive and flourish in our new environment.”