The Maine Department of Health and Human Services announced this week that it has begun contract negotiations with a Maryland-based company to manage mental and behavioral health services for the MaineCare program.

The so-called “managed care” model is expected to streamline costs and improve efficiency, but critics are wary of unintended consequences.

DHHS Commissioner Brenda Harvey said in a prepared statement this week that the Administrative Services Organization, based in Silver Spring, Md., will coordinate treatment, make referrals to services, provide follow-up and monitor the effectiveness of services. Affected services include mental health counseling, medication management, residential care and problem-solving support for people with mental illness.

According to the announcement, the cost of providing mental health services in Maine is growing at an unsustainable rate. From 2003 to 2006, spending rose by 90 percent, while the number of people receiving services grew by 34 percent.

Maine spent $442 million on mental and behavioral health services in 2006 and was projected to spend a total of $1 billion over the next two years. Switching to the managed-care model provided by Administrative Services Organization, along with other changes, is anticipated to reduce growth by $33 million over the biennium.

Kay Carter, an administrator at the Bangor nonprofit agency Community Health and Counseling Services, said she’s hoping for the best from the new managed-care structure. If it results in fewer psychiatric hospitalizations, more timely delivery of mental health services, and more effective interventions at a lower cost, she said, “I have no problem at all.”

But if agencies like hers experience increased administrative burdens due to a more cumbersome administrative process, or if money saved in the community mental health system is lost to high rates of hospitalization due to unmet needs, then, she said, the effort will be a failure.

Community Health and Counseling Services provides mental health services to about 5,000 people.

The Administrative Services Organization is one of eight companies that responded to the state’s request for bids to manage mental and behavioral health services. It is a subsidiary of APS Healthcare Bethesda, a private, for-profit corporation that administers public programs through contracts in 46 states and Puerto Rico.

A committee that included consumer representatives, DHHS staff and an independent consultant evaluated the proposals.