Legislative Update - Running the State's New Mental Health Agencies

By Rose Hoban

Yesterday, lawmakers, mental health officials and advocates spent the afternoon wrestling with how the state’s mental health agencies will be governed in the future.

The changes in governance will be necessary to accommodate wide-sweeping restructuring passed by the legislature and signed into law by Gov. Bev Perdue last summer. The changes are being phased into the state’s mental health system over the coming year.

Legislative Building in Raleigh, Image courtesy of State Government Relations, UNC

“We really want to try to get it right,” said Representative Nelson Dollar, a Republican from Wake County who chairs a Health and Human Services subcommittee on the mental health agencies.

The legislation requires all mental health local management entities (LMEs) in the state to convert themselves to the new model of administration or be taken over by an LME that has made the change. By the time the consolidation is through, the state will have only 11 LMEs, down from 23 organizations when the process started.

Once the changes are finalized. North Carolina’s mental health agencies will function like small insurance companies, similar to HMOs. Under the new structure, the state pays a flat monthly rate for each patient served, and LME managers need to provide all the care for all of the patients they are responsible for within that set amount of money.

It can be a risky proposition, based on the idea that if the care of people with mental health issues is done properly, it can produce better results, for less money. But unlike an insurance company, if an LME gets into financial trouble, the state will pick up the tab if costs run out of control.

“If one of them fails, the state is at risk,” Dollar said. “A lot is at stake.”

Last year, North Carolina spent about $1.5 billion in state and federal dollars to provide mental health services, said Steve Jordan, director the state Division of Mental Health, Developmental Disabilities and Substance Abuse Services. “Next year, that number will be about $2 billion,” he said. That money includes some some for the LMEs to make the transformation.

Dollar walked legislators, advocates and state officials through a process of determining how the boards of directors for the new agencies will be composed and how they will function. Proposals include adding clients of mental health agencies and their family members, health care, financial and insurance experts, and service providers.

Dollar also proposed each board have a member appointed by the state Secretary of Health and Human Services.

Currently, many LME board members are county commissioners, and political appointees, but for years, advocates and state officials have expressed concern about the independence of these board members and their willingness to reign in problems at LMEs.

“The highest pension recipient in the state was an LME leader whose board kept giving him the green light,” complained Sen. Tommy Tucker a Republican who represents Mecklenburg and Union counties. Tucker referred to Charles Franklin, former head of the Albemarle Mental Health Center who retired with an annual pension of more than $200,000 after being fired from his agency, which later folded.

“We need to not have ‘yes’ boards,” Tucker said.

Advocates also said they have often been unhappy with the boards as they currently are.

“I have emails from people in the mountains,and the eastern part of the state and a neighboring county where LMEs have known about bad situations and not responded,” said Laurie Coker, head of the North Carolina Consumer Advocacy, Networking and Support Organization.

“The board is important. It bears legal responsibility when things go wrong,” Coker said.

Coker and other advocates at the meeting urged lawmakers to be sure consumers of mental health services are included in the composition of the new boards.

“No matter what you’re managing, whatever business, if it’s product based or service based, you want consumers to partner with you,” Coker. “We’re trying to get people to realize it’s a good business decision to hear from the people using the system.”