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Mental Health

State Managed Care Organizations to Consolidate

By Taylor Sisk

The state Department of Health and Human services announced this week that the 10 agencies that provide state- and Medicaid-funded mental health, intellectual and developmental disability and substance abuse services will be consolidating into four agencies.

The managed care organizations (MCOs), formerly called local management entities, are regionally based and will remain so under the new alignment, with one in the east, two in the central region and one in the west.

Proposed new map of the state's LME-MCOs.

Proposed new map of the state’s LME-MCOs. Source: NC DHHS

“The consolidation to four LME-MCOs will help create a more sustainable behavioral health system while continuing to improve services through more efficient delivery of care,” Mary Hooper, executive director of the N.C. Council of Community Programs, which represents the organizations, said in a statement released by DHHS.

“We are strongly committed to the McCrory administration’s vision of a sustainable Medicaid program that has budget predictability and – most importantly – meets the needs of the people it is responsible for serving in the most integrated way possible.”

According to the proposed plan, 300,000 to 350,000 people will be covered in each region. The proposal must now be approved by DHHS, and a timeline will then be set.

Council of Community Programs leadership told DHHS Sec. Aldona Wos of their plans at a meeting in Pinehurst last week. Wos signaled her support for the proposal, saying, “We have set clear and high expectations for our LME-MCOs as they have matured this year, asking for more accountability, higher quality and a willingness to evolve by consolidating.

“They have truly stepped up and I appreciate their dedication to making our system stronger.”

A waiver to the Social Security Act approved by the federal government in 2011 allowed the state’s MCOs to move from a fee-for-service payment system to a managed-care system. MCOs receive a set monthly payment from the state, and with that money must provide mental health, intellectual and developmental disability and substance abuse services for everyone under their care.

The entire state is now operating under this model.

People who have watched the state’s mental health system have been hearing for quite some time that the state was planning consolidation. According to Disability Rights North Carolina head Vicki Smith, the rumors have been coming for some time. “The rumor has been four, four, four,” she said.

Earlier this year though, consolidation was not a foregone conclusion. State leaders expressed surprise when the former Western Highlands Network lost its state contract and was absorbed into the Smoky Mountain Center. And one of then new-Sec. Wos’ acts was to reinstate Mecklenburg County’s LME-MCO, MeckLink, into the system after Perdue administration officials signaled MeckLink would be folded into another entity.

Laurie Coker, director of the North Carolina Consumer Advocacy, Networking, and Support Organization, said she’s been telling people for a couple of years that major consolidation was inevitable.

“The more broadly people understand our years of poor Medicaid management, the more I feel stakeholders across the state are accepting that we have to brace ourselves for changes,” Coker said.

Smith said her agency is concerned about the consolidation, especially as DRNC still has several active lawsuits against Kannapolis-based LME-MCO Cardinal Innovations (which originally was known as Piedmont Behavioral Health).

And the entire LME-MCO system received a shock recently when federal officials sent DHHS a letter expressing concerns about how revenue is handled by the LME-MCOs.

“For grants and subgrants with state and local governments, allowable costs under A-86 do not include profit or other increments above cost,” Nancy Klimon, director of the Division of Integrated Health Systems at CMS, wrote in a letter dated Oct. 24.

Earlier this month, Gov. Pat McCrory convened a Medicaid Reform Advisory Group to discuss the future of the federal-state partnership program that provides physical and behavioral care for more than 1.7 million North Carolinians.

Health care professionals representing DHHS suggested at the time that the state might be divided into six or seven regions in which medical networks and insurance companies would compete to manage this care. It was also suggested that the state’s MCOs could expand to provide all Medicaid services – physical and behavioral.

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