A locally-based program that provides short-term housing to individuals experiencing mental health crisis, as an alternative to hospitalization, could be a model as the state looks to redesign the Medicaid program, said Daniel Hazen, executive director of Voices of the Heart.

The nonprofit organization, among other services, operates a "peer respite program" in Hudson Falls, essentially a 2-bedroom apartment, that provides services to residents of Warren and Washington counties.

Someone in crisis can call 798-1100 to talk with a staff member, and if necessary the staff member will arrange for the individual to come to the respite house.

The respite program provides services for about $250 per person per day, compared with $1,200 to $1,400 if the same person went to a hospital, Hazen told Gov. Andrew Cuomo's Medicaid Redesign Team at a public hearing at Adirondack Community College last week.

The hospital estimate includes the cost of ambulance transportation, an emergency room visit and an overnight stay, Hazen said later.

A heavy reliance on hospital care for the mentally ill is among the reasons Medicaid costs in New York are so high, said Harvey Rosenthal, executive director of New York Association of Psychiatric Rehabilitation Services, an advocacy organization.

The Medicaid program now spends about $1,400 per member per month for chronic medical and mental health conditions, according to the state Department of Health.

Mental health is one of the higher cost areas that certainly will need to change the way services are provided, said Medicaid Director Jason Halgerson.

Hazen said the local respite program costs less and is more personalized than receiving care in a hospital.

"We're offering people care at lower cost but really connecting with the person in a different way -- a holistic way, every part of their life," he said.

People typically stay anywhere from three to 15 days at the local respite house, which is funded with a $283,000 annual state grant and about $17,000 in local charitable contributions.

It is one of only two such programs in the state and only nine in the nation, he said.

Hazen said the reason there are not more of these type programs is because the funding is limited.

If the state directed more money to programs like his, it would save the state money, overall, he said.

David Kruczlnicki, president and chief executive officer of Glens Falls Hospital, said he was not familiar specifically with the local peer respite program, but said reducing the frequency of hospital emergency room visits is one of the goals of redesigning Medicaid.

Another goal, Rosenthal said, is to enroll more mentally ill recipients in Medicaid managed care plans.

Rosenthal urged the panel to enroll recipients in specialized managed care plans, called "behavior health management organization," rather than traditional HMOs.

"And so we accept that it has to be managed now. But we think we should be managed under the supervision of the agencies that know us best," he said.

Kruczlnicki said the Medicaid program could save money and increase efficiency by consolidating state agencies.

"Specifically in the area of mental health and behavioral health services there is a number of redundant bureaucratic layers," he said. "We believe it makes sense to consolidate the Office of Mental Health, the Office of Alcohol and Substance Abuse Services, and Office of Persons with Developmental Disabilities into the Health Department in the interest of efficiency and reduced redundancies."

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