Medicaid beneficiaries in the mental health system say they need an appeals system that works better for them. But a bill to fix the appeals-and-grievance system is caught between the North Carolina House and Senate.

By Rose Hoban

To regular attendees of the Joint Legislative Oversight Committee on Health and Human Services meetings, Mary Short and her daughter Katie are familiar sights.

Mary, who has an unruly shock of gray hair, sits next to Katie in the front of the visitors’ section, listening to the proceedings. During the meetings, Katie sometimes giggles; loudly says, “Yes!”; or makes indistinct noises as she stares ahead.

Katie, 33, has a profound developmental disability. Though she can’t communicate using words, she points at things, grabs the hand of someone standing next to her, rubs her face to express frustration or rocks back and forth when she’s nervous.

“She’s like an 18-month-old infant,” Mary Short said of Katie, who has been developmentally delayed since birth.

For all but a few years, Mary has provided all of Katie’s care. During one six-week placement in a group home in 1998, Katie had unexplained bruises and ended up getting overdosed on her seizure medication. So Mary pulled her out and has been doing it all herself since.

And Mary has also spent years fighting the state of North Carolina over Katie’s care.

In the past, Mary has gotten the state’s Medicaid program to pay her for 16 hours a day for which she’s “on duty.” She provides care the other eight hours, but isn’t paid for it.

But last year, Smoky Mountain Center, the mental health agency that manages Katie’s care, knocked those 16 hours of paid care per day down to 12. That was in November, and Mary’s been fighting the system since.

While Mary makes her appeal to the system, she’ll continue to get paid for the full 16 hours of care; that’s part of the appeals process. When a petitioner files an official appeal, the state is required to continue providing the original level of service. Mary won’t say how much she gets annually to do it, but said that along with the Social Security disability check Katie gets each month, it’s what the two of them live on.

But the appeals process typically takes months to get through layers of bureaucracy and in front of an administrative law judge, who makes a final determination.

The length of that fight and the torturous appeals-and-grievance system that the families of people in the Medicaid mental health system have to go through is the subject of a bill that’s currently stuck in the state Senate.

“We need to speed up the appeals process,” said Sen. Ralph Hise (R-Spruce Pine), the bill’s Senate sponsor. “It takes a long time to get through it. It’s not a process that you can readily identify and move through.”

But as the end of the session looms, time to get Senate Bill 553 passed is running out. Last week, the Senate voted not to concur on the latest House version of the bill.

Carrying the burden

Over the past year, North Carolina’s Medicaid program has been in transition. Under the old system, Medicaid paid local management entities (LMEs) on a fee-for-service basis to manage all of the care for people with mental illness, developmental disabilities or substance-abuse issues.

Now those LMEs have been transformed into managed care organizations (MCOs) – essentially, small insurance agencies –which receive a monthly lump sum of money from the state to provide care for all their patients.

The MCOs are supposed to give each mental health patient what they need – not too little, not too much – all within a smaller budget.

”In the managed-care model,” said Vicki Smith, head of Disability Rights North Carolina, “once a consumer is stabilized, you start withdrawing support.”

Smith is concerned that this can create a cycle of hospitalization, stabilization, deterioration and repeat hospitalization, in particular for mental health patients.

People with developmental disabilities often appear to be in a stabilized condition – showing few signs of any change in their condition – and as the system has transitioned, families have found themselves having to prove their loved ones continue to need services.

That’s why Disability Rights has been working to make Senate Bill 553 more favorable to consumers.

“One of the sticking points is who has to prove what,” said Corye Dunn, a policy analyst for Disability Rights. “In the House version of the bill, the burden of proof always falls on Medicaid recipients and their families to prove they need a service.”

Sometimes that means people like Mary Short are put in a position where she has to repeatedly convince her MCO, mediators and, now, an administrative-law judge that Katie needs a service she may have been receiving for years.

“Where someone has already been receiving the benefit, then shifting the burden of proof to the enrollee is unreasonable,” said Dunn, explaining her organization’s position. “Often we’re talking about someone who has a lifelong disability and nothing has changed, but the plan of care has been changed….

“For them to bear the burden of proving their entitlement is unreasonable in a case where Medicaid has been providing a service that makes sense.”

Dunn said Disability Rights believes the MCOs should have the burden of proof because they’re the ones taking the action to change the plan of care.

The Senate version of the bill stipulates that when an agency wants to reduce a service, it must prove the service is unnecessary.

And that stipulation is also in the federal regulations for Medicaid MCOs, Dunn said.

In effect, what’s in the House version of the bill forces Medicaid recipients to meet a higher standard of need than people who receive physical health services under the state’s Medicaid program.

Process is sticking point

The other sticking point in the bill is the process by which people in situations similar to Mary Short’s can appeal decisions made by MCOs.

Dunn said when someone wants to appeal a decision, the process starts at the MCO. If an agreement can’t be reached, the case can go to a mediation process. Only a handful of beneficiaries, like Mary and Katie Short, reach the administrative courts each year.

Dunn said the vast majority of people settle before a hearing by an administrative-law judge.

“Mary Short is not typical at all,” she said. “She’s very engaged in the process, knows what her rights are.

“But most folks settle because, for the most part, there’s a middle ground that can be reached – and because many people don’t have the sophistication to fight as far as Mary has.”

But currently, there’s no timeline for how quickly appeals have to be heard by the MCO. The Senate bill would change that, requiring that MCOs respond to beneficiaries within 10 days of an action and inform people of their rights to appeal.

The Senate bill also specifies what information must be provided to beneficiaries and gives an overall timeline detailing the process the MCO must follow.

It also outlines what an MCO must do to make the hearing process more accessible to someone with a disability and instructs administrative-law judges to “make reasonable efforts in a case involving an enrollee who is not represented by an attorney to assure a fair hearing.”

The House version of the bill lacks any of that language.

Dunn said it’s important to hash these issues out now – not just for the mental health system but for the entire Medicaid system. She also points out that in recent court cases, judges have ruled that MCOs must provide beneficiaries and their families with adequate notice of service changes and adequate opportunity to appeal.

“As we move toward broader managed care, it’s good to have these things under our belt,” Dunn said, referring to the fact that Gov. Pat McCrory has proposed moving the entire Medicaid system to a managed-care system.

Having the principles clearly established is helpful, she said.

When asked about the bill, House Health and Human Services Committee chair Nelson Dollar (R-Cary) was not expansive about how the impasse would be resolved.

“I think there’s a difference of opinion on a couple of provisions,” he said.

The mental health MCOs that have been involved in lobbying on the bill were similarly reticent. Calls to Alliance Behavioral Healthcare went unanswered, and a spokeswoman from Cardinal Innovations Healthcare Solutions (formerly known as Piedmont Behavioral Health) said the biggest issue is bringing North Carolina law into compliance with federal managed-care rules.

“The existing state Medicaid statutes were designed for the historical fee-for-service Medicaid system and Senate Bill 553 updates NC law to reflect the federal requirements for Medicaid managed care,” wrote spokeswoman Rachel Porter in an email.

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