By Rose Hoban
The presentation started as an update to legislators on how North Carolina’s Medicaid reform process will affect people with mental health and substance use problems.
Instead, the discussion during Tuesday’s meeting of the Joint Legislative Oversight Committee on Medicaid and NC Health Choice turned into a hour-long interrogation of Richard Topping, the CEO of Cardinal Innovations, one of the state’s publicly funded mental health managed care organizations.
Legislators, and even the state’s Health and Human Services Secretary Rick Brajer, lit into Topping, criticizing his new million dollar-plus reimbursement package. They also criticized the way Topping has stretched the boundaries of legislative mandates and his agency’s use of public money.
“I received minutes from your board, Sept. 16 of 2016, they made that motion, that your 2017 comp (sic) package, they raised your salary from $400,000 to $635,000, they gave you a 0 to 30 percent bonus potential which could be roughly another $250,000 and also you have some sort of annuity or long-term package of $412,000,” said Sen. Tommy Tucker (R-Waxhaw).
“We’re serving the poor, we’re serving the least of these… how do I as a legislator… or any of us who are getting the calls from a mom or a dad who’s got a disabled child on a five-year waiting list, how do I explain to them this board has given you that kind of compensation package?”
Topping has been CEO of the Kannapolis-based Cardinal since April 2015, when former CEO Pam Shipman was pushed out by the agency’s board, which included Topping.
During his exchanges with the committee Tuesday, Topping defended his board’s salary decision by noting that Cardinal had saved the state money year-over-year, even as it absorbed five other agencies in less than a decade.
“We do not have six CEOs, six management teams, or six workforces,” he responded, noting the organization’s salaries are at 50 percent of the market. “So, even at market-based pay, it still costs less than to have six workforces at government pay.”
Topping argued that allowing Cardinal to pay “market rate” was the same thing the General Assembly did when it waived state employee salary limitations for the new DHHS Division of Health Benefits, created to manage the state’s new Medicaid system.
“I think the highest paid person within [the Division of Health Benefits], in terms of total compensation, is less than $300,000,” responded Brajer. “Certainly, of my direct reports, it’s generally lower than that.”
The funds supporting Cardinal are taxpayer money, emphasized Mark Botts, an attorney from the UNC Chapel Hill School of Government who is an expert in the legal aspects of North Carolina’s mental health system.
“The vast majority of revenue is either county, state, or federal money,” Botts wrote in an email. “Once revenue is received by an LME-MCO, it is public money subject to the fiscal control and budgeting laws applicable to other local governments like cities and counties.
“This does not necessarily answer the question whether the Cardinal board can approve a salary the size of the one it has approved for its CEO.”
Botts referenced a statute which orders that any unusually high salary should be supported by “documentation of comparable salaries in comparable operations within the region.”
NC Health News requested the CEO salary figures from all seven of the state’s LME/MCOs and heard from two: Trillium, based in the eastern part of the state, and Alliance, which covers people in and around Wake County. Both those organizations’ CEOs, Leza Wainwright and Robert Robinson, make less than $200,000, which is about half of Topping’s reported original salary.
Wainwright said the other LME/MCO chiefs around the state, except for Topping, make about the same.
Topping’s responses did little to quell the palpable frustration in the room among legislators.
But the sharpest comments of the afternoon came from Brajer, whose anger became increasingly evident as he addressed Topping.
“Everything that Cardinal Innovations does today, they do today is exactly what every other LME/ MCO in the state does, in terms of provision of services,” he said. “There’s nothing unique or different.”
Brajer emphasized the organization has been given an exclusive monopoly by the General Assembly to perform its work.
“[LME/MCO’s] role is to do exactly what the legislature, what the governor wants them to do… until they convince the Legislature that they want to do more.”
Brajer said that Topping is erroneous to compare himself and his staff’s salaries to those of hospitals or other parts of the healthcare market. He also noted other LME/MCOs are doing innovative and interesting projects, often moreso than Cardinal, while paying their leadership less.
“If you think about the population we serve, the most vulnerable… if they’re uninsured and literally they have nothing, or if they have Medicaid services, or whether they’re on a waiting list, whether they have a desire to have more services, we know there is so much more we can do with our LME/ MCOs,” he said, “I think it’s unconscionable to have a total compensation package of $1.2 million for an LME/MCO.”
Brajer asked legislators “for more support statutorily to make sure LME/MCOs do the work that they’re supposed to do and do it in a financially responsible way.”
The Senate had proposed a bill during this year’s legislative session that would have put some more controls on LME/MCOs. But that bill died in the final days of the session.
“We may do something about the LME/MCOs, but there’s only one that acts out of range,” said Tucker after the meeting, noting that Cardinal has “done everything within the law.”
But Tucker reiterated his frustration with Topping’s compensation.
“It’s awful to have to have someone walk up to you at church or at a school football game or grocery store and show you their child that’s disabled, that needs services that private insurance won’t pay for any more and I can’t help them,” he said throwing up his hands.
“But then I’ve got to tell them, we’ve got a guy over here who serves you that’s got you on a five year waiting list and he’s making a million bucks.”[box style=”0″]
Cardinal has long been a different kind of animal in North Carolina’s mental health ecosystem.
Originally known as Piedmont Behavioral Health, the organization was one of North Carolina’s mental health “local management entities” (LMEs) created during the mental health reform instituted in the early 2000’s.
By 2002, former Piedmont CEO Dan Coughlin had convinced legislators to allow his organization to run a pilot program for delivering mental health services for the Medicaid and uninsured patients in his five-county region using a model that’s more familiar to for-profit insurance. Coughlin’s newly created managed care organization used a waiver from federal authorities to get one lump sum of money from the state and use it as they deemed fit, so long as they delivered services.
By 2008, the organization was saving the state money, but mental health providers were starting to chafe under the restrictions created by the agency while many patients complained about denied services.
”In the managed care model, once a consumer is stabilized, you start withdrawing support. You can destabilize the individual,” Disability Rights North Carolina head Vicki Smith told NC Health News in 2012. “That is what is happening with many of our clients.”
Over the years, Smith and her organization often sued Piedmont over denied services and they have frequently won.
Nonetheless, the savings produced by Piedmont was tempting to legislators. In the fall of 2011, HB 916 ordered all of the state’s LMEs to convert to managed care organizations, and “maintain fidelity to the Piedmont Behavioral Health (PBH) demonstration model.”
When the mental health reform process started in the early 2000s, there were 23 LMEs, now there are seven LME/MCOs. By the end of 2017, that number will be down to four.