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By Rose Hoban
In December, legislators criticized the head of one of North Carolina’s state-funded mental health managed care organizations over his rich compensation package.
Richard Topping, head of Kannapolis-based Cardinal Innovations was raked over the coals by multiple lawmakers – and even former Health and Human Services Sec. Rick Brajer – for receiving a compensation package that could potentially top a million dollars a year.
Now, those same lawmakers are proposing a bill that would limit the remuneration for Topping, and any others who lead the state’s mental health managed care organizations (called LME-MCOs).
House Bill 403 makes a number of technical changes to the governance of LME-MCOs. But buried on page 8 is language that would limit compensation for CEOs.
“There’s been some real questions raised,” Rep. Nelson Dollar (R-Cary) told the House Health Care Reform Committee on Tuesday. “There’s an audit coming out in the next few weeks that will reflect on this. So we’re getting appropriately ahead of what we believe will be the results of that particular audit are going to be.”
LME-MCOs were created by a law passed in 2011. HB 916 changed North Carolina’s mental health system away from one where state and counties directly employed psychologists, psychiatrists, social workers and others to care for mental health patients.
In its place, lawmakers created a system where state-funded companies “managed” the care of mental health patients. Those providers who were once paid by the state now were told to become private contractors who would bill the LME-MCOs. LME-MCOs were intended to function as small managed care companies that receive a set payment from the state per month to provide services for a set a pool of patients and told to make it all work.
The model for this system was an LME-MCO known as Piedmont Behavioral Healthcare, which operated under a pilot program for close to a decade in five counties between Charlotte and Greensboro.
HB 916 took the Piedmont Behavioral Healthcare model and made it a statewide system.
“From many, many aspects this has been a tremendous success,” said Dollar on Tuesday.
Dollar authored HB 916 and was the bill’s primary sponsor.
“We went from budgets that were hundreds of millions… out of control, to a system that is very much in control today and is a model for other states to consider,” Dollar told the committee.
In 2011-12, issues of governance and independence were decided in a legislative committee process that considered basic questions such the makeup of advisory committees, how counties could participate in overseeing services, and whether LME-MCOs should be able to independently take out bank loans.
From the beginning, leaders at Piedmont Behavioral Health, which changed its name to Cardinal Innovations, pushed back against the constraints placed on them by the state.
That became evident in 2012, when Cardinal’s leaders asked the General Assembly for proprietary rights to management software they developed and wanted to sell to other state-funded LME-MCOs.
Some argued that one public agency shouldn’t bind another public agency or restrict access to intellectual property developed with tax dollars.
And then there were the lawsuits.
Disability Rights North Carolina found itself suing Cardinal repeatedly in the past decade, over rates paid to providers, over access to care for mental health patients and over due process for patients denied services.
So, when Topping’s board agreed to give him a base salary of $635,000, plus as much as $250,000 in annual bonus, and an annuity package that put him over a million a year in pay, it raised objections from lawmakers and advocates alike.
Public records requests issued by NC Health News to all of the other LME-MCOs in the state found their CEOs making around $200,000 per year.
HB 403 would set tight limits on LME-MCO leaders’ salaries, limiting a CEO’s salary only 30 percent more than comparable CEO salaries. The bill would also require LME-MCO boards to get state approval for a salary increase that his more than 30 percent higher than other CEOs’.
“We want to make it very clear, these are public bodies,” Dollar said. “They’re stewards of tax dollars, there are only tax dollars that really flow into these LME-MCOs.”
“Compensation should be reflective of the fact that these are not private entities,” he said.
A different league
“We respectfully disagree with the premise of this [HB 403],” Cardinal lobbyist Joe Lanier told the Health Reform Committee on Tuesday. “What this bill does is move the situation more toward regulation and bureaucratic oversight authority.”
“This bill moves the relationship between LMEs, the local governments and the state into a different league,” he said.
No one else in the state’s mental health community expressed objection to the bill, and it passed the committee unanimously.
“We had an opportunity to meet with Rep. Dollar and Sen. [Tommy] Tucker (R-Waxhaw) and they shared with us the content and their intention and asked us for feedback,” said Mary Hooper, executive director of the North Carolina Council of Community Programs, the umbrella organization for all of the state’s LME-MCOs, except for Cardinal.
Cardinal terminated its membership in the NC Council of Community Programs several years ago.
“I think the way that the legislature worked it out, at this point it seems fair,” Hooper said. “And we appreciate being included so much.”
In response to a query from NC Health News, Cardinal spokeswoman Ashley Conger wrote: “The State of North Carolina has been openly committed to Medicaid reform and the ultimate goal of recognizing the benefit of whole person care by integrating behavioral and physical healthcare systems. H403 signals a shift in the State’s stated position on Medicaid in the opposite direction and changes the relationship between the Department and the LME/MCOs from a contractual relationship to a regulatory one.”
Conger argued the bill serves to make North Carolina’s LME/MCOs agencies of state government.
“Further embedding the LME/MCO system in state government makes it impossible to integrate care for our most vulnerable citizens. As such, Cardinal Innovations is opposed to any bill that does not place the best interest of our members, their families and communities first.”
This story has been updated with a response from Cardinal Innovations.