Green Spring, CMG win Md. Medicaid deal Firms' joint venture, Md. Health Partners, gets mental health job

400,000 enrolled in plan

Companies grow by offering savings to business, government

December 27, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

Maryland has awarded the job of administering mental health treatment for 400,000 Medicaid enrollees to two Baltimore-area managed-care companies.

A joint venture of Green Spring Health Services Inc. of Columbia and CMG Health Inc. of Owings Mills will manage mental health care for Medicaid patients over the next three years, the companies said. The job starts Jan. 2, and the joint venture is called Maryland Health Partners.

Public details of the contract were fuzzy yesterday. It was unclear, for example, how much the job would add to the companies' revenue or how the contract would affect patients.

State officials were unavailable for comment and Green Spring spokeswoman Catherine Campbell said she could not supply a revenue figure.

But the deal, which will also include an undisclosed number of uninsured Maryland residents, is another boost for Green Spring and CMG. Both have grown rapidly in recent years by catering to the desires of employers, governments and other payers to clamp down on rising psychiatric and psychological costs.

"We look forward to bringing our public sector expertise to our home state and supporting Maryland's core service agencies to deliver the best possible care to those in the program," Henry T. Harbin, Green Spring's president and chief executive officer, said in a written statement.

Although the new job goes live next week, Maryland Health Partners has been aware since last month that it would probably receive the task, Green Spring's Campbell said.

The contract was signed only recently, she said.

Both Green Spring and CMG have experience managing taxpayer-financed health programs. Green Spring runs behavioral, public-sector financed health care for more than 1 million people; CMG's public sector enrollment is 760,000.

Like Maryland's Medicaid program, more and more payers are hiring corporate managers such as Green Spring and CMG to steer care and control costs. Maryland's Medicaid program, for example, expects managed care for all types of health services, which goes into effect in 1997, to save an eventual $8 million a month.

But such programs have proved to be controversial, sparking charges that necessary treatment is harmed or even denied in the process.

In a written statement, CMG President and Chief Executive Alan J. Shusterman said: "We look forward to building on a strong working relationship with consumers and providers."

CMG, founded in the 1980s, had revenue of only $27 million as recently as 1993. Its executives have been expecting to take in more than $150 million next year. CMG covers about 3 million people nationally.

Green Spring, founded by Blue Cross and Blue Shield of Maryland in 1989 but since largely sold to other investors, has grown to about $200 million in revenue this year. Green Spring now manages mental-health and substance abuse benefits for more than 15 million people across the country.

A majority of Green Spring stock was purchased last year by Charter Medical Corp., which changed its name to Magellan Health Services Inc. Several Blue Cross and Blue Shield companies own minority shares in Green Spring.

Pub Date: 12/27/96

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