For years, the Substance Abuse and Mental Health Services Administration (SAMHSA) has been talking about pushing states to be more accountable for how they spend federal block-grant funds. In late December, absent much fanfare, SAMHSA finally unveiled its proposal for transforming the addiction and mental-health block grants into more demanding -- yet more flexible -- Performance Partnership grants.

The proposal provides a rudimentary start to the kind of system that many in Congress would like to see -- in which states can determine their own needs, but in turn are expected to meet performance goals identified in partnership with the federal goverment.

As the name implies, the Performance Partnership Grants envision that awards of block-grant funds to the states -- which total about $1.75 billion annually -- will become less formula-driven and focused more on achievement of addiction treatment and prevention goals, such as improving retention in treatment or changing community attitudes toward drug use.

But as the new rules emphasize, "SAMHSA is not interested in penalizing states for not meeting performance objectives, choosing instead to work with them to further improve the service system."

"We are not proposing any changes that would alter eligibility for funding under the two programs, nor are we changing the formula for distribution of those funds," said SAMHSA Administrator Charles Curie. "We are changing the relationship between the federal and state governments to achieve our goal of improved services for those with mental-health and/or substance-abuse disorders."

SAMHSA is proposing to shift emphasis away from the current "process requirements, financial earmarks, and accountability based on narrative documentation of compliance and expenditure reports." In its place, says Joe Faha, SAMHSA's director of legislation, is a system that assumes that states want to continually improve the quality and effectiveness of their services and would welcome federal assistance in doing so.

It's clear that this proposal is an interim step, with SAMHSA not fully committed to flexibility, and states still a long way from being held fiscally accountable for their performance. Historically, accountability has never been a cornerstone of the block grant. In some instances, such as the Synar regulations governing underage tobacco use, states were subject to penalties for non-compliance. But these rarely worked to change states' behavior.

Under the Performance Partnership concept, states would not necessarily face direct penalties for failing to meet their goals. But those who hold the purse-strings would be watching, said Faha.

"I think Congress already has come to the conclusion that this approach works," said Faha. "We've all become rudely aware that if we can't show results, we're not going to get more money ... The Office of Management and Budget (OMB) has made it clear to [SAMHSA] that they're going to be looking at the block grants and measuring us and looking for us to meet our long-term goals. If not, they've indicated that they're willing to recommend reduced funding."

Moreover, SAMHSA will report to Congress not just the progress being nationwide, but also how individual states are performing. "It's not our purpose to embarrass anyone, but to show Congress what each state is doing," said Faha.

Set-Asides Would Be Eased

For states, the benefits of the SAMHSA proposal include removing some current "set-asides" -- mandates that a percentage of block-grant funds be spent on specific services, which states contend limit their ability to tailor services to local needs. The proposal ends the set-aside for IV-drug users; also eliminated is a requirement that at least five percent of all block-grant funded treatment programs be independently peer-reviewed, and the stipulation that states improve their referral systems and coordination with other healthcare services.

Other major set-asides remain, such as one requiring that 20 percent of block-grant money be spent on prevention, and a requirement that money be set aside for women with children and HIV early-intervention services. However, the new rules say that the Secretary of Health and Human Services can waive many set-aside requirements if the state is meeting related performance goals.

Other restrictions that would remain include the ban on funding needle-exchange programs, a ban on paying for hospital-based inpatient treatment, and a cap on spending block-grant money for treatment of prisoners.

"The [restrictions] that remain were largely because NASADAD (the National Association of State Alcohol and Drug Abuse Directors) wanted them," said Faha. "They may not be what comes out the other end." The National Governor's Association, for example, would like to see more of the set-asides eliminated, noted Faha.

Performance Indicators Identified

The foundation of the new proposal, based on years of debate and discussion between NASADAD and SAMHSA, are the indicators that will be used to guide and assess state performance.

Treatment performance measures identified in the proposal include rates of drug use, employment status, criminal-justice involvement, living status, social support, treatment penetration rates, completion rates, and length of stay.

Prevention performance measures include coalition-building, workforce development, technological capacity, ability to assess need, number and type of programs available, demographic information, and public attitudes towards drugs.

SAMHSA says that work is continuing on identifying additional performance measures, and should be completed by October 2003.

States Remain Skittish

Under the proposal, states would have to tell SAMHSA what the objectives of their treatment and prevention systems are, and would have a three-year period to show how they are improving. But states will not be required to report data on performance indicators until at least 2005. And state agencies remain skittish about the cost of setting up the data-collection systems they say are needed to provide adequate information to base performance measures upon.

"Without an immediate infusion of additional federal funds [for data management], the timeline for the transition to the Performance Partnership Grant would be severely delayed," said Luceille Fleming, director of the Ohio Department of Alcohol and Drug Addiction Services, during recent congressional budget testimony on behalf of NASADAD. "Further, the implementation of the Performance Partnership Grant is predicated on the current system of providing adequate and baseline funding levels to each state for substance-abuse prevention and treatment services. Any changes to this system would endanger the ability of states to participate successfully in the Performance Partnership."

But while some worry about the potential pitfalls of reshaping the block grant, others say that the price of inaction may be equally high.

"The list of performance measures is a good start, but without a mechanism for holding states accountable for measuring, reporting, and enforcing these standards, this exercise will have no effect on improving treatment," said David Rosenbloom, director of Join Together, a resource center for communities taking action against addiction and gun violence. "Congress has asked for years that agencies that receive federal money be held accountable for how they use it. Unless this happens in the addiction field, I believe that continued federal funding will be at risk."

SAMHSA is currently accepting public comments on the proposal. Comments are due to SAMHSA by Feb. 23, 2003, and should be submitted to Joseph D. Faha, Director of Legislation/SAMHSA, 5600 Fishers Lane, Room 12C15, Rockville MD 20857; 301-443-4640.