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Mental Health, Developmental Disabilities, and Substance Abuse Services System Reform in NC |
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Why Reform?
Control finances
Increase local governance
Promote accountability
Respond to trends toward privatization
Reduce reliance on
institutions
Increase confidence in
system
Spur innovation
Prior to reform, the public mental health system consisted of MH/DD/SAS centers, called Area Programs, that were semi-autonomous governmental authorities receiving funding from
State and in some cases local government. These area programs provided services directly to individuals and also billed insurance companies, Medicaid and the State for their care, where
applicable.
The Division of MH/DD/SAS operated state facilities and hospitals for
facility based treatment of mental illness, developmental disabilities and substance abuse and also provided policy direction and budget management to the mental health system. The system, while
serving 350,000 thousand consumers a year, also produced well documented financial failures and difficulties both at area mental health authorities and at the Division of MH/DD/SAS including
Medicaid paybacks and the dissolution of the Carolina Alternatives Medicaid waiver program for children. In light of these problems, some local governments desired more control over mental health
services and agencies; not unlike the greater control exercised over welfare reform/TANF programs. State and local governments, legislators, advocates, and consumers all wanted not only to know
where the money was going but also what outcomes are being achieved for consumers with the money being used.
Local and state governments have seen increasing privatization of traditional government delivered services in an effort to use money more
efficiently through private market competition. For some MH/DD/SAS consumers and families there is also a belief that privatization of care and supports will provide better consumer choice and
higher quality services.
North Carolina relied very
heavily on its institutions – in 2000 it was 65% more than similar states. A NC State Auditor’s report released in 2000 also showed that state institutions are old
and in need of major renovations or replacement. Concurrently in 2000, states were gearing up to respond to the U.S. Supreme Court’s Olmstead decision and to a consumer advocacy movement to
ensure that people can live in the communities of their choosing, in the least restrictive environment, and that institutions are used appropriately; not because of a lack of community
services.
Consumers, families, advocacy groups and other members of the public have
for a long time voiced their beliefs that something needed to change. With the volumes of research on and innovation in best practices for persons with mental illness, developmental disabilities
and addictive disease was becoming more widely understood and discussed. In many cases these new practices were a difficult fit for an aging system that relied on institutional care and
traditional outpatient services. Despite this ill-fit, most advocates believed that the system was not in need of major reform, but in need of direction and a commitment to
fully-fund needed services.
Reform Basics
Who, what, where, and when
County chooses structure, determines partners
250,000 minimum population or waiver
Consolidation of
LME/Area Programs
LME manages, services
divested
State creates plan for
system
Local community creates local
plan
Evidence–based practices/New service
definitions
Consumer Family input,
CFACs
Hospital beds reallocated/hospitals downsized
After a year of study and stakeholder input, the General Assembly passed
Session Law 2001-437, commonly know as House Bill 381 MH/DD/SAS Reform. The thirty-one pages of statute changes form the basis of what the Division of MH/DD/SAS now calls “system
transformation” that mandates greater County oversight and consumer input, focuses the system on the most seriously disabled, divests services and supports from Area Programs to community
providers, and calls for the development of local and state level plans for the new system.
In this system the County has several options. They can keep the current
area program as a local management entity (LME, with changes to governing board as outlined in the legislation) that will oversee services delivered by a network of providers, they can also join
with other counties to create a multi-LME system with a lead LME agency, or create a county government program (like Wake, Durham, or Mecklenburg), or create a multi-county program with a lead
county. A single LME must have at least a population of 200,000, or be at least a 5 county region in order to address economies of scale. This 200,000 population threshold was determined as the
minimum to prevent a higher use of funds for administrative costs. Several LMEs did not meet the threshold and needed to negotiate mergers or seek a waiver from the state. Additionally, mental
health reform statutes originally outlined a need to reduce administrative costs in the mental health management from 13% to 9% over a number of years. As part of an effort to do so, DHHS
proposed consolidation of some LME functions, utilization management (UM) and after-hours phone screening/triage/coverage, That would divided the state into 12 regions and a
single LME from that region would provide the UM and phone services for all LMEs in that region. Mandated mergers of management and services have met with opposition, but some regionalization is
taking place to address crisis services. Funding for administration continues to be inequitable, inadequate to meet the management cost model and provided to each LME, not on a regional basis.
Medicaid UM functions have been contracted to a single statewide vendor based on decisions by CMS and NC DMA that Medicaid UM must have statewide uniformity. Advocates and LMEs are concerned that
consumers will not get good services when local decision making is removed, although a lack of uniformity has also contributed to problems with
access.
The LME is not a service
provider, but they may retain some core services. Or, they may apply to DHHS for a waiver to continue service provision if there are no qualified providers. Many LMEs spun off service provision
into private non-profits; several have gone under and left gaps in local service provision. The LME is in charge of policy and oversight. They determine if outcome goals are being met, employ
methods to improve quality, manage the provider network, including endorsement of providers (but are not in charge of Medicaid licensing). LME’s may also direct payment, but Medicaid
service providers directly bill Medicaid as of March 20 of 2006.
Since
2001, the State has written and updated yearly its plan for the new system. The basic concepts of the transformation include: provide services and supports in the community rather than in
institutions, the system should be participant driven, prevention focused, outcome oriented, reflect best practices, be cost effective, integrated in to communities, and there should be resource
equity and fairness throughout state. Everyone gets screening, triage and referral. Other services and supports are targeted to those most in need including the most seriously ill or disabled,
racial/ethnic minorities, and those with more than one disorder. These services need to reflect our best understanding of how to ensure that persons are supported in or recover from their
conditions. To ensure that we are maximizing our use of Medicaid dollars, of which 63% comes from the federal government, North Carolina has re-written and received approval for new Medicaid
service definitions that provide additional services and supports. Some proposed definitions were not approved and the state must appropriate additional funds to ensure that some persons getting
“community based services” will have replacement services. The state hospitals have been a no-cost treatment of default to low-wealth and high need communities and have been
undergoing downsizing and consolidation. Many attempts have been made to re-allocate hospital beds and reduce the over-utilization of high end care. Additional pilot project have recently bee
approved, but the root causes of hospitalization - a lack of stable community based services, local crisis services, and a need for addiction detox and treatment are much slower to occur.
Local plans were developed by local stakeholders including counties and
the area program with consumer and family input. The reform bill mandates the operation of consumer and family advisory councils (CFAC) to provide input into the direction of the local system and
oversight of consumer outcomes.
The Challenges Ahead
A system 30 years in the making will not be
transformed overnight. Community capacity to provide services relies on leadership, adequate funding, time and support for development and a qualified workforce.
The system needs funding to make the transition. Since it cannot shift funds from institutions until
services are in place, North Carolina is effectively operating two systems until the transformation takes place. The state’s aging institutions are our inpatient safety net and also need to
be updated. Institutional funding has built-in inflationary increases. Community funding has only been increasing through expansion in the use of Medicaid. LMEs serve two times the number of
clients as 10 years ago with only 11% more State funding. Medicaid pays for about 50% of MH services delivered, but only 1 in 5 clients qualifies for Medicaid [Please note: This varies across
populations: 60% of DD, 50% of kids, 30% of MH adults, 0% -20% of SA (depends if they are in an eligibility category or have other conditions)]. Some populations have an entitlement to Medicaid
services; others such as those qualifying for CAP-MR/DD programs can only get services if state funds are allocated.
The MH/DD/SAS Trust Fund was created to help fund the transition and develop community MH/DD/SAS capacity but has been raided during the budget
crisis, minimally funded and left without a stable, ongoing source of revenue. Funds allocated have often not been used for the direct funding of community services start up, but for
administrative and planning purposes. In addition, in order for the public mental health system to operate effectively, North Carolina needs health insurance plans to provide parity between
coverage for physical health and mental health disorders to lessen cost shifting to the public system (Parity will begin July 1, 2008)
Workforce issues are a problem across healthcare systems, but the need for
psychiatrists/psychiatric consultation and nurses is acute, as is the need for qualified staff in rural parts of the state. New service definitions require increased qualifications and training
to ensure good services, but this must be balanced with the need to ensure that individuals have access to services regardless of where they reside.
The multitude of options for local systems creates more local control, but also a very diverse system with the
potential for even greater inequity in services. In carrot and stick system, the administration is short of both carrots and sticks when it comes to assuring good consumer outcomes.
Prepared by the Mental Health Association in North
Carolina
Version: October 2007
For questions or more information please contact Jennifer Mahan, Director of Policy and Advocacy Initiatives, 919-981-0740 x270 or 1-888-881-0740 x270.
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