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Health and Human Services Committee Roundup – February

By Rose Hoban

Medicaid shortfall will be met – really

Yesterday, state lawmakers reiterated their commitment to addressing the state’s Medicaid shortfall before the end of the fiscal year in June.

Nelson Dollar a Republican representative from Wake County, assured outgoing Secretary of Health and Human Services Lanier Cansler last month the general assembly would take care of the $149 million shortfall the same way lawmakers addressed last year’s shortfall – closer to the end of the fiscal year.

For months, the Medicaid gap had been the subject of a political back and forth between Republicans in the General Assembly and Democratic Governor Bev Perdue.

Last year’s budget directed officials at Health and Human Services to make hundreds of millions of dollars of cuts to the program, that’s paid for by state and federal dollars. But the federal government had to approve many of the cuts, and it’s taken time. As a result, the Medicaid program has continued spending at prior rates for some programs.

“It’s instructive to understand that this phenomenon is nothing new,” Dollar said during a meeting of the Health and Human Services oversight committee Tuesday morning.

Dollar also pointed out the shortfall was even greater for the fiscal year that ended last June, to the tune of $601 million.

“The fact is that it was higher than what we’re going to have to work through in the current fiscal year,” Dollar said.

Changes to mental health system rolling out fast

Map of the state's mental health agencies or LMEs

Map of the proposed mental health agencies in North Carolina. Image courtesy NC DHHS

Consumers of mental health services will be seeing changes coming to the agencies that provide them with care soon.

Last summer, lawmakers passed legislation requiring all mental health local management entities (LMEs) to restructure themselves to a new model of administration, or be taken over by an LME that has already made the switch. In the consolidation, the number of LMEs in North Carolina will shrink from 23 organizations to 11.

The changes are happening quickly. Many LMEs are already consolidated, with at least a half dozen more mergers taking place this summer.

Once the process is complete, all of the state’s LMEs will function like small insurance companies, similar to HMOs. The state will pay a flat monthly rate for each patient served and LMEs are then required to provide all services for all their clients within that amount of money.

Advocates for people with mental illness and developmental disabilities say their constituents are watching the changes warily.

According to Pam Shipman, head of Piedmont Behavioral Health, most of the people served in by county-based agencies merging with her organization won’t see any difference.

Piedmont Behavioral Health, which serves Cabarrus, Davidson, Rowan, Stanly and Union counties, has been operating under this administrative model since 2005.

The organization has been sued several times by Disability Rights North Carolina and the cases are making their way through the court system. One of the issues cited by Disability Rights is an opaque process for appealing denials of service.

Last week, Piedmont Behavioral Health sued the state over a case that’s being heard by the Office of Administrative Hearings over the appeals issue.

“There’s a lack of clarity regarding appeals, and we were looking for clarification from the CMS (Centers for Medicare and Medicaid Services),” Shipman told legislators about the lawsuit. “We’ve asked the court to keep things as they are now. We’ve done this out of concern about the cases we’re arguing (in the other lawsuits). They’re about our ability as a managed care company to manage costs.”

According to Disability Rights head Vicki Smith, Medicaid appeals from actions made by Piedmont Behavioral Health account for more than half the cases her organization has argued before the Office of Administrative Hearings, an office of state government that hears grievances from citizens around decisions made by state agencies.

“More important is the fact that PBH does not choose to meaningfully participate in OAH-sponsored mediation, thus requiring every appeal to proceed to hearing,” Smith told advocates in a publicly circulated email.

Officials from many state agencies have ignored rulings by the Office of Administrative Hearings in the past. But state lawmakers enacted legislation last fall requiring state agencies to adhere to decisions made by judges in the Office of Administrative Hearings.

“We support right of consumers to appeal and question our decisions,” Shipman told the panel about her organization’s decision to sue.  “But… we have to, as a managed care company, to set limits.  if we can’t, we’ll run out of money and won’t be able to function as we have.”

“Federal law says the single Medicaid agency has final say over appeals,” Shipman explained. “The General Assembly changed that to the Office of Administrative Hearings. Currently they hear the appeals, but it still goes to DMA (Division of Medical Assistance, the state’s Medicaid program) for a final decision. The division would no longer be the final authority, it’d be OAH.”

“This requires a waiver from CMS, that’s different from how it usually happens in the states,” Shipman said.

Shipman said LMEs will achieve savings from the mergers by consolidating functions such as claims processing, human resources, call centers and other administrative functions. Piedmont Behavioral Health has also limited the number of providers who can serve people with mental health problems in their area, saving money. Now the organization is absorbing providers from other agencies.

‘We were unprepared for the number of providers that would come into the network,” Shipman told oversight committee members. “We didn’t know there would be so many more. We’ve had some trouble getting all these providers enrolled.”

Under rules set out by DHHS, new LMEs are required to give one-year contracts to all providers who are currently seeing people with mental illnesses or developmental disabilities. Beyond that time, LMEs have discretion over who they will contract with to provide services.

“If you have too many providers it drives administrative costs up. You have to find the right balance to find providers to provide the care and how many are a reasonable  number to manage,” Shipman said.

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One Comment

  1. guestMay 7, 2012 at 1:17 am

    I do not for a minute think there are “too many providers”. That is nuts. PBH kills services. The answer to the increase in administrative costs is NOT slashing actual services. The answer is- knock it off with the data bases and the continued high dollar effort to avoid providing services.
    Administrators do not help the population PBH is responsible for managing- in fact PBH’s layer upon layer of bureaucracy directly robs the people (consumers and providers) they are being paid to support and help.

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