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

By Rose Hoban

After months of work, a bill that would have reined in executive spending by the leaders of North Carolina’s mental health managed care organizations seemed ready for final passage this week – until it was rewritten into a form that would upend the state’s mental health system.

HB 403 was intended to put restrictions on extravagant expenditures by administrators at the state-funded organizations, known as LME-MCOs. The measure was in part a response to revelations in a report from State Auditor Beth Wood about leadership at Cardinal Innovations, the LME-MCO that manages the care for mental health patients in 20 counties in the center of the state.

headshot of Cardinal CEO Richard Topping.
Initially, HB 403 was intended to cap salaries of mental health management agency leaders, such as Cardinal CEO Richard Topping . Image courtesy Cardinal Innovations

That report detailed booze-soaked Christmas parties, first class air travel, monthly detailing on the CEO Richard Topping’s car and a $630,000 base salary for Topping that, with bonuses, could surpass a million dollars a year.

The original bill was crafted with the assistance of members from both chambers, passed the House in April, and went to the Senate, where it sat until Tuesday.

“I got an inkling late Tuesday that there was something,” said Leza Wainwright, the CEO of Trillium Health Resources, the LME-MCO responsible for mental health services in 24 eastern counties. “I didn’t see the [bill language] until about 10 p.m. Tuesday night and I was flabbergasted.”

The substitute bill, presented by Spruce Pine Republican Ralph Hise, would keep a few of the restrictions that could clip the wings of Cardinal’s CEO. In exchange, the bill eliminates all of North Carolina’s LME-MCOs once Medicaid reform starts to roll out, slated to happen in about two years.

“It has, in my opinion, watered down the directness of the original 403,” said Sen. Tommy Tucker (R-Waxhaw), who has been sharply critical of Cardinal both publicly and in one-on-one conversations. “It’s almost like get out of jail free card for Cardinal and I don’t want that to happen.”

“The extravagance and spending, while they may not have been illegal, they certainly were in my opinion, morally corrupt,” he said.

Expediting integration

During the committee meeting, Hise – who led the effort to rewrite the bill – hearkened back to arguments from 2014 and 2015 about the nature of the Medicaid overhaul process that was being debated at the time.

Back then, the Senate made it clear they wanted the reworked Medicaid program to spell the end of the LME-MCOs. In its place, senators preferred commercial managed care companies running Medicaid, with those companies overseeing both physical and mental health care in an integrated system.

Instead, what was hashed out was a hybrid plan, where commercial managed care companies will bid on regional and statewide contracts for physical health only, while the LME-MCO system runs in parallel for at least four years after the new regimen goes live.

“The entire solution to this system is to expedite that process of integration and make it effective as soon as… those managed care and regional plans come into effect and allow those entities with experience to take over the mental health system,” Hise said.

According to Medicaid chief Dave Richard, federal regulators will likely greenlight North Carolina’s request to change Medicaid’s form sometime early next year. The new system goes into effect 18 months from that time, likely mid-2019.

And that’s when Hise would sunset the LME-MCOs.

Unanswered questions

But it’s not that simple, said Trillium’s Wainwright. For one thing, LME-MCOs don’t only provide behavioral health services to people on Medicaid, but also provide care for people lacking insurance altogether.

That care is financed by state dollars. Wainwright described how Trillium has used so-called single stream funding for uninsured patients to create an early childhood home visiting program in the agency’s 24 counties, for example.

“That’s serving a very underserved population, with the goal of intervening upstream, before matters get worse,” she said.


Trillium has also created after school programs and summer camps for kids with autism and kids who have other intellectual and developmental disabilities. And the agency has installed satellite mental health screening kiosks in all 24 counties that include a direct telephone line to providers.

“The huge unanswered question is what happens to the funding for the uninsured,” Wainwright said. “My understanding from talking to people across the country is that managed care plans have not been willing to pick up and administer that funding because it does not come with administrative dollars.”

In both Louisiana and New Mexico, state officials made the assumption that the commercial plans would be willing to administer state dollars, but they were not, according to Wainwright.

She also worried about what happens to crisis services under managed care. That kind of care is hard to fund and state dollars provide the backstop.

“Who is responsible for making sure that service remains available?” she asked.   “Because just the regular fee-for-service payment or the per member per month payment is not going to keep that in place.”

Bargaining chip

Despite the stated objections of Tucker and of Sen. Jeff Tarte (R-Cornelius), the bill received committee approval and now will go to the Senate floor where it’s expected to pass. Then, it goes to a conference committee to be hashed out behind closed doors.

Several ranking members of the House have been clear that the bill, as it stands at present, is not acceptable. But they’ve also said they know this is part of the horse-trading between the Senate and the House over this year’s budget.

photo of a couple, both dressed in blue, each wearing badges labeled NAMI
Jerry and Ann Akland have spend decades advocating for the needs of people with mental health problems, such as their daughter, who has been diagnosed with bipolar disorder and Aspergers Syndrome. Photo credit: Rose Hoban

Part of Rep. Nelson Dollar’s (R-Cary) objection to the reworked bill is that it would destabilize the mental health system by making moves too quickly.

“The last time there was a sudden shift in how we operate in North Carolina’s behavioral health system, it took us the better part of a decade to recover from that,” he said, referring to the reform effort of the early 00’s.

That point was reiterated by Ann Akland, head of the Wake County chapter of the National Alliance for Mental Illness, who wrote an email to all of the members of the Senate on Thursday afternoon.

“It has taken over 15 years for the state mental health system to stabilize from all of the disruption of closing state hospital beds and privatizing the system,” Akland wrote. “At last, there is a good, solid network of mental health providers delivering services and a management network of LME/MCOs that is ensuring quality and access to care.”

She asked that legislators not disrupt the system again.

Dollar reminded that the current LME-MCO system was piloted for five years at one site, legislators made tweaks to that system, and have tuned it continually since it’s launch in 2013.

“There’s no sort of silver bullet, some group out there that’s just going to turn over very complex populations and large amounts of money in a complex system and suddenly, they’re going to answer all your questions, solve all your problems,” Dollar said.

“This is not a system that lends itself to simple solutions,” he said.

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Rose Hoban

Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...

15 replies on “Bill Would Speed Another Overhaul of NC’s Mental Health System”

  1. I’m not sure I’d call the current state of the mental health system “stabilized.” We have our emergency rooms overflowing with people in acute mental health crisis, and one of the worst ED boarding problems in the country. What keeps people out of emergency rooms? Access to quality treatment in the community. It’s very hard to find that in either the private or public sector.

    1. Exactly. Just because a pesticide has its doors item doesn’t mean they are a good provider.

  2. But HMO’s have done so well! (Extreme sarcasm intended). So because there were a few bad players at Cardinal, Hise and his cohorts would rather not fix the problem but instead make it far far worse, both for people who need the services as well as those who provide services. This is sabotage, and selling us out to the highest bidder.

    1. I would also like to see how much that Republican senator makes per year off of the taxpayers while he only works about one-third of the actual days. Now that’s scamming taxpayer dollars.

  3. There is so much to say here . . . but the only thing that would produce best value for the dollar is a transformative change in how this state considers the individuals this system is aimed at serving.

    If it weren’t for stigma and perceived opportunisim on the part of too many decision makers (elected and not), we would not be going through this or the rest of what we have gone through in the past fifteen years! It is our citizens with certain challenges who suffer, and they and their families are all too often NOT regarded as serious and informed stakeholders in these decisions. This must change or we will continue to re-create our system.

  4. I think this is a good move for the state. LME/MCO’s are using the system to make money for their state affiliated organizations and denying consumers services and saving money by gauging providers and putting providers in situations that they are more concerned about how to stay in business than focusing on consumer needs because the LME and MCO’s are restricting their ability to provide services at a cost efficient rate.

    Yes there will be some hiccups initially, but we need a system that is streamlined statewide to ensure that all the consumers in need of services are treated fairly. Client care is not fairly implemented consistently across the state. Rules are being interpreted by LME/MCOs just to save money and consumers/providers are the ones losing.

    Services should be cost efficient but also should be provider driven because they are the ones providing the services to our clients.

  5. If you have commercial health insurance then you know what for profit management of health care is about, the bottom line/margins/shareholders profits/CEO salaries/bonuses/perks…rarely do you hear that a human being is happy with there health insurance provider because people are usually suffering if they have a disease/disorder/syndrome and not only don’t we have the cures, private market forces drive down the capacity to provide care in managing symptoms in many forms, not just dollars.
    I’ve never heard of a commercial insurance company providing or having the know how to provide care/services to persons with IDD-most likely as there are no profits to be had and I think the author does good to point out the lack of oversight for crisis and other non profitable lines of services as a result of removing quality management. Disrupting the systems of care again in NC in my opinion leads to increased suffering for the folks that have the least and don’t find there voice in the great halls of Raleigh.
    I think its time to coordinate some buses from all regions of our most acute and suffering folks, get them some tents as most are already homeless, and send them to Raleigh, provide them with the home addresses of our legislators for alternative camping sites, and allow our decision makers the opportunity to experience direct care in its rawest form. We usually don’t get any heart from the great leaders of this state until somebody in there family has a turn in health for the worse and then we hear all about what NC health couldn’t do for them and there’s and how a change would really be good. Really? Some of the best college educated folks coming together exponentially in our legislature, some even with high IQ’s I would imagine, and this is the best we can come up with? No wonder mother nature is going to kill us off for sheer stupidity and campaign sound bites, well done!

  6. As far as I am concerned the mental health system in this state is in a shambles to start with. I have a mentally ill daughter who is 46 years old. She has borderline personality disorder and seems normal until you have to deal with her and her “problems”. Then you wonder what the hell is the matter with her. She gets NO help from anyone. She doesn’t have Medicaid or any kind of insurance. The older she gets the harder it is to understand her and her thought processes. It has been left up to me take care of her and make sure she has food, a roof over her head etc. I am retired and my social security isn’t enough for me to live on much less support her also but no one will see her and no one will counsel her. I am so sick of this state and it’s lack of mental health care that I feel like I am losing it myself. The point is there is nothing that the legislature will do to help us. NOTHING. I am tired, tired, tired and see no hope for her on the horizon. My advice is if you have a mentally ill person in your family is to get out of North Carolina and move to a state that actually has mental health services. Unfortunately I can’t afford to move or I would have years ago.

  7. I am a fellow journalist who got waylaid into managed care almost 30 years ago. I have been in several states include Ohio, TN, GA and both of the Carolinas. I now specialize in behavioral health contracting in NC. One major problem for NC is that the managed care payers historically have reimbursed BH providers far less than their medical counterparts, as much as 30-50% less. Health Systems have taken on all behavioral health patients with the intent that someone has to take care of these folks. They are often seen first in the Emergency Room, where the folks in triage frequently deal with difficult dual diagnoses patients. Getting these patients admitted to a BH facility or scheduled for a visit with a license BH provider can be difficult and is all too often way too much time consuming. The health systems have pioneered providing tele-psych services in outlying acute care facilities to access psychiatrists 24/7. That helps with people in NC counties where there may be NO licensed psychiatrists. Trying to close the gap to allow for reasonable reimbursement rates for individual BH providers is an uphill battle. I think the State Legislators need to allow for much more input from the BH Providers and BH Facilities, those on the front lines, in mapping out solutions to how the state handles taking care of North Carolinians who suffer from BH diagnoses. Thirty years of experience in managed care tells me that when a for profit entity is positioned between the funds provided by the state, and the actual patient who needs BH services, the for profits always find a way to make a buck; make lots of bucks. If the for profits were in another business, like making widgets, I would not begrudge them. But to take care of shareholders and managed care executives, at the expense of tightly managing the BH services offered to those who need it most, is both pitiful and immoral. And I say this as a conservative who wants to make sure our NC dollars for BH services are well managed. But we also must do all we can to help diagnose and treat those North Carolinians who are in most need of behavioral health services.

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