By Rose Hoban
Just hours after the final gavel fell on the the North Carolina General Assembly’s long work session on June 30, an email landed in the boxes of reporters: Alliance Behavioral Healthcare announced it was cutting back on vital mental health services it had promised to create in Wake County and other parts of the Triangle.
The cuts came as the agency rethought plans in light of tens of millions of dollars in state appropriations being cut from the budget of Alliance and North Carolina’s six other state-funded mental health management organizations.
The organizations, known as LME-MCOs, manage the allocation of mental health services across North Carolina. The dollars cut by lawmakers are “single stream” funds, intended to cover the costs of uninsured people who need mental and behavioral health care and are unable to pay.
“Coupled with $262 million in Single-Stream Funding cuts over the past two years, these new cuts force Alliance to scale back and even eliminate components of our comprehensive plan to reinvest $43 million over a three-year period to meet the pressing needs of our communities,” read a community bulletin distributed by the agency.
All told, the LME-MCOs lost more than $86 million in budgeted funds this year and another $90 million in fiscal year 2018-19.
“This is the critical State funding that supports uninsured and underinsured North Carolinians,” the notice read. “It is important to understand that these cuts have tangible consequences to the health of many of the most vulnerable citizens living in Durham, Wake, Cumberland and Johnston counties.”
Alliance is not alone. Representatives from LME-MCOs around the state told NC Health News that they were all taking a second look at their spending plans in the coming year.
Funds for indigent patients
Patients who are disabled – either because of mental health or developmental disabilities – are eligible to receive payment for their behavioral health services from Medicaid, the program that pays for care for about 2 million low-income children, some of their parents, people with disabilities, and seniors receiving long-term care in North Carolina.
But people who have no insurance depend on state dollars to cover their costs when they become delusional or attempt suicide or suffer depression.
In the 1990s, those people could turn to a network of county and area agencies that provided mental health services. But after a scathing state auditor report in 1999, the General Assembly moved to reform the system, privatizing services that had once been provided by doctors and therapists who were state and county employees. At that time, these local management entities (LMEs) stopped providing services and transformed into agencies that, instead, referred patients for care by private providers.
Further changes in the system launched in 2013, when those LMEs were further transformed into managed care organizations (MCOs). Under plans set in motion by House Bill 916, those LME-MCOs were given a set amount of funding each year and ordered to provide all the services to all the people in their catchment areas who needed them.
Legislators ordered LME-MCOs to take whatever savings they could accrue and invest the dollars into plans to open facilities such as crisis centers or camps for kids with developmental disabilities. But since 2015, lawmakers have accused the LME-MCOs of sitting on their cash balances and started clawing back those monies into state coffers.
Just getting rolling
But Alliance CEO Rob Robinson said that lawmakers are taking back funds just at the point where LME-MCOs can effectively spend them.
“We’ve been in existence for four years now,” Robinson told NC Health News in June. “Our first year was just getting our providers enrolled and delivering services. The second year was about, ‘Alright now let’s evaluate and assess what we need to do, what are the gaps in the system.’ Our third and fourth year, what we’re in right now, is where we’ve begun to invest our services.”
Robinson said his organization was planning to create a new 16-bed adult crisis facility in Wake County which could serve 200-300 people per month.
“It took a long time just to find a facility, finally we got one, you’ve got to go through the whole process to get it up and going,” he said. “There is no real estate in Wake County.”
Robinson said the decision to hold onto those dollars until they were ready to spend them made business sense because the organization wanted to spend them wisely. For instance, the agency is going ahead with creating a child and adolescent crisis facility in Fuquay-Varina.
“This money can only be used for a public purpose for reinvestment back into services,” he said. “This is part of making good business decisions with the money that people entrust to us.”
But legislators have learned other LME-MCOs haven’t been as responsible with their funds. A blistering state audit released in June found that leaders at Cardinal Innovations, the LME-MCO which manages care in 20 counties, mostly in the center of the state, had used some of their saved up funds to pay for a high salary for their CEO, expensive Christmas parties, first class travel and out-of-state board retreats at posh resorts.
When asked about the effect of such an audit on his agency, Robinson said that people at his agency “just do potlucks” for their Christmas party, and declined to comment further.
Pulling back, holding steady
Alliance is the only of the state’s seven LME-MCOs to make a public announcement about cuts to services, but, when contacted, other agencies admitted to taking a hard look at their plans in the wake of the General Assembly’s budget.
“In all likelihood, some of Trillium’s programs could be potentially at risk, or simply reduced,” wrote Jennifer Mackethan, a spokeswoman for Trillium Health Resources, which serves 24 eastern counties. Eastpointe, the other LME-MCO serving eastern North Carolina, also said it was not making any changes to its benefit plan now.
A spokesman for the Sandhills Center, which serves nine counties in the Sandhills region said his agency had no planned cuts and that reserves were sufficient to continue service at current levels. But he noted, “the reductions will likely limit the funding available to expand service capacity or add additional service options at this time.”
Vaya Health, which serves the 23 westernmost counties in the state has already reorganized and laid off staff as of July 1, wrote spokeswoman Rachel Leonard-Spencer.
“The budget mandates that all MCOs continue to offer the 2015 level of state-funded services, despite dramatically cutting funding to support those services,” she wrote. “Moving forward, Vaya will only be able to maintain services at the 2015 level.”
She noted that unlike Medicaid services, non-Medicaid services are not an entitlement and are dependent on state dollars. And Leonard-Spencer noted that over the past two years, Vaya’s board allocated $21 million in savings on Medicaid dollars to make up the costs of caring for the uninsured.
As a result, the agency has put plans on hold for a Wilkes County facility-based crisis project, specialized veterans’ services, substance use recovery housing, peer-run recovery centers and jail diversion programs.
“Vaya must make up the shortfall by utilizing Medicaid savings designated for community reinvestment, thereby forcing us to suspend our comprehensive plan to reinvest our savings to meet urgent… needs of our communities,” Leonard-Spencer wrote.