ORGANIZATION: The Georgia Department of Community Health (DCH). PROBLEM OR ISSUE ADDRESSED: Rapidly rising costs of treating mental illness in the Georgia Medicaid population. GOALS: The Georgia Medicaid program has experienced rapidly rising costs of treating mental illness. Along with this, clinical studies have described the benefits and risks of the various agents used to treat mental illness. For this study, mental health drugs included medications for: Attention Deficit Hyperactive Disorder (ADHD), Selective Serotonin Reuptake Inhibitors (SSRI) atypical antipsychotic agents and new generation antidepressants. DCH sought to reduce the cost of treating mental illness while maintaining quality of care provided to members. Cost reduction was to be obtained by promoting the use of preferred products in these categories through the traditional methods of co-pay differentials (preferred and non-preferred agents), step therapy protocols, as well as prior authorization. OUTCOMES ITEMS USED IN THE DECISION PROCESS: DCH utilized clinical recommendations from the GA Drug Utilization Review Board to define optimal therapy based on the clinical data. Clinical input from practicing psychiatrists was also utilized to structure the program and exception criteria. Concerns raised by national as well as local mental health advocacy organizations also shaped the outcomes that were measured as part of this effort. Costs were monitored by examining units of service, as well as the total cost and numbers of prescriptions for central nervous system medications for mental health patients. Hospital admission rates, average length of hospital encounters, number of emergency department visits, physician office visits, as well as loss of Medicaid eligibility due to incarceration were all included in the outcome measures tracked. IMPLEMENTATION STRATEGY: Prior to May 2004, all medications in the therapeutic category were evaluated from a clinical perspective and recommendations made to DCH by the Drug Utilization Review Board. Next, the net cost to the state, associated with treatment with each agent was considered. Preferred and Non preferred status was assigned to some agents, others were included in step therapy protocols, and finally some agents were only obtainable with prior authorization. Policy changes in drug coverage were then phased in between May 1, 2004 and November 1, 2004 with all current users being grandfathered. The order of implementation was ADHD, SSRI’s, Atypical Antipsychotic agents and finally new generation antidepressants. Follow up to monitor the outcomes measures (total payments, units of service, the total cost and numbers of prescriptions for central nervous system medications for mental health patients, hospital admission rates, average length of hospital encounters, emergency department visits, physician office visits, as well as loss of Medicaid eligibility due to incarceration) was conducted every three months for two years following the policy changes. RESULTS: The follow up monitoring of members receiving these mental health drugs demonstrated a significant savings in pharmaceutical expenditures with no adverse effect of total healthcare expenditures or utilization. The measures employed (i.e. prior authorization, stepped therapy, and co-pay differentials) did not appear to adversely affect persistence with these medications. Additionally, disenrollment from Medicaid due to incarceration did not increase among this group of members during the observation period. LESSONS LEARNED: The inclusion of mental health drugs in a pharmacy benefit design is a controversial effort. Allowing continuation of established therapy and requiring members new to therapy with these mental health agents to go through a prudent, clinically appropriate process to utilize the most cost-effective medication available has the potential to decrease the cost of pharmaceuticals without adversely affecting the utilization of other more costly healthcare resources. When embarking on the inclusion of mental health medications in a pharmacy design benefit that includes prior authorization and step therapy, it is imperative that stakeholders have complete understanding of the reason for inclusion, the process to assure access to necessary medications, as well as feedback regarding the outcomes measured.