In front of PBH's Kannapolis office.
In front of Cardinal Innovation's Kannapolis office, which was the corporate headquarters until they were moved to Charlotte. Photo credit: Lydia Wilson for NCHN

By Rose Hoban

Even as officials from the Department of Health and Human Services were touting the success and stability of the current mental health system, lawmakers expressed impatience Tuesday morning with the speed of new service creation and denials of service to their constituents.

Citing large cash balances held by the state’s mental health managed care organizations, Sen. Tommy Tucker (R-Waxhaw) and other lawmakers said that state-funded local management entities/managed care organizations needed to start spending on patients.

“As if December 31, 2015, the LME/MCOs have $842 million in cash, Medicaid dollars,” Tucker told the Joint Legislative Oversight Committee on Health and Human Services during its monthly meeting.

“These folks have got more cash than the state has in its fund balance,” he said.


He and other lawmakers from both sides of the aisle went on to ask DHHS leaders about why their constituents are being told they are not eligible for mental health services or have been denied care.

But Courtney Cantrell, director of the state’s division of mental health, assured lawmakers that even after being the target of a $110 million reduction in state funding, “No services have decreased or will be decreased this year as a result of cuts in state funding.”

Spending down

Since North Carolina moved to place the mental health system into the hands of state-funded local management entities/managed care organizations, the General Assembly has allocated them extra money to build up their risk reserves, to be used in the event of an influx of expensive patients.

In front of PBH's Kannapolis office.
Cardinal Innovation’s Kannapolis office. Photo credit: Lydia Wilson for NCHN

There have also been worries that LME/MCOs would not achieve financial solvency. So, lawmakers have also allowed them to hold onto any money they’ve saved in the process of providing care, with the understanding that extra money should go for filling the gaps in care.

For example, Leza Wainwright, head of Trillium Health Resources, told N.C. Health News last August that her organization was using cash reserves to build after-school and summer camp programs for children with intellectual and developmental disabilities in the 24 eastern counties in which Trillium provides services. This week, Trillium announced a partnership with the Autism Society of North Carolina to accomplish the work.

But in the past, LME/MCOs have also used their savings to erect swank corporate buildings, such as Cardinal Innovations’ $14 million headquarters in Kannapolis.

Over the past year, lawmakers grew concerned that LME/MCOs were sitting on hundreds of millions of cash instead of implementing promised new programs.

So in the state budget passed last fall, lawmakers mandated cuts in so-called “single-stream” funding, which covers services not paid for by Medicaid or other entitlement programs.

The cuts totaled $110 million for this fiscal year and $152 million for 2016-17.

The legislature told the LME/MCOs the cuts should not result in reductions of services to patients. So when Cardinal announced last fall it was limiting new clients for several services, it raised concerns among lawmakers.

Eye on the ball

Rep. Nelson Dollar (R-Cary) reminded DHHS leaders that the LME/MCOs are public entities, “So you can do the level of monitoring and oversight … as well as be able to dig in, to whatever the degree you need to dig into, the actual finances of the LME/MCOs.”

“There’s really nothing they can hide from your view,” he said.

Deputy HHS Sec. Dave Richard moved to reassure lawmakers that they were watching what the LME/MCOs were doing, and presented a “gap analysis.”

He pointed out that the mental health system as it stands today was only created in law five years ago and implemented in 2013.

“This is a relatively young system,” Richard said. “If you asked any one of us up here and if you asked any of the CEOs, ‘Are you satisfied with where we are?’ we would all say, ‘Of course not.’”

Sen. Tommy Tucker (R-Waxhaw)
Sen. Tommy Tucker (R-Waxhaw)

He did note that there remains a list of at least 10,500 people waiting for a “slot” in the state’s comprehensive services for people with intellectual and developmental disabilities.

But Richard asserted that the system “as designed” is beginning to show the kind of progress lawmakers were hoping for.

But those changes haven’t been happening quickly enough for some.

“A number of us have received complaints from consumers about denial of services,” Tucker told Richard. “I’m incensed when someone calls me and tells me they can’t get services and there’s cash sitting there.”

Tucker angrily ticked off the cash balances held by different LME/MCOs.

“At $842 million, we ought to be able to ride this out and get the services that they need,” he said. “Yet some of these executive directors of these LME/MCOs are telling their board members they’re going to have to cut services because of what the legislature did, while they sit there with $842 million in cash.”

Tucker said that DHHS leaders need to remind LME/MCOs to “get their eye back on the ball, and that’s serving the children and the adults that need the services.”

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