In this issue:

Money Report

Special Provisions

The General Assembly approved their version of the budget adjustments act and the governor signed it into law July 16, 2008. Overall, the state budget has grown by 3.5 %. Funding for some services to individuals with mental illness, developmental disabilities and substance abuse services did see an increase, state psychiatric hospitals got funds to increase staffing, and new community crisis services will be started. Most disappointing was the lack of increases for service and supports in the community and support for workforce initiatives outside of the hospitals. Eighty-five million was cut from Medicaid for the Community Support Service (CS) and the Division of MH/DD/SAS was cut by 4.3 million dollars. More on the CS changes can be found below under "Special Provisions." This summary includes a list of expansion and reduction items related to MH/DD/SAS in the Health and Human Services portion of the budget, as well as additions to the Housing Trust Fund. Items are recurring funds, unless otherwise noted. Parenthesis ( ) indicate reduction in funding.

Money Report

Services and Supports in the Community

6,666,667                    CAP - MR/DD Tiered Slots - total is 10 million; budget
                                    amount reflects expected delay in implementing during
                                    this fiscal year

4,655,000                    Mobile Crisis Intervention Teams
                                    (11 teams for total of 30)

1,100,000NR               Mobile Crisis Teams (one time expenses)

8,121,644                    New Local Psychiatric Inpatient Capacity

1,737,250                    START Crisis Model for Developmental Disabilities

138,993 NR                 START (one time expenses)

903,375                       Respite Beds for DD

177,617 NR                 Respite Beds for DD   

4,463,947                    Walk-in Crisis and Immediate Psychiatric Aftercare

1,650,000 NR              Walk-in Crisis (one time expenses)

1,875,000                    Early Intervention for Autism

1,000,000                    Traumatic Brain Injury Services

State Hospitals and Facilities

155,226                       Funds to support death reporting requirements in
                                    state institutions

3,100 NR                     (same)

7,275,824                    Clinical Staffing Ratios at State Psychiatric Hospitals
                                    (107 positions)

1,802,561                    Clinical and Operational Enhancements of State
                                    Facilities (19 positions)

51,951 NR                   SAME as above - one time expenses

1,270,519                    Recruitment and Workforce Development in state
                                    facilities

 608,333                      (shows as 0$ in money report) Uses receipts to fund
                                    replacement of resident furnishings in state mental
                                    health facilities

1,016,667 NR              Same as above

5,212,166 NR              Dorothea Dix Hospital Overflow Unit (60 beds, 174.75 
                                     FTEs)

472,785                       Julian F Keith ADATC Pharmacy (4 positions)

Housing

7,000,000 NR              MH/DD/SAS/Disability Housing Initiative funds for
                                    Housing Trust Fund

1,000,000                    Housing Initiative Operating Cost Subsidy

129,331                       Supportive Services for HUD 811 Projects

155,000NR                  HUD 811 - start up costs

200,000                       Program Service Funds for Group Homes

Re-alignment funds

8,000,000                    Allows for a total of 8 million of current SA funds to be 
                                    used for regional/local addiction treatment services.
                                    Does not allocate new funds to SA.

Reductions

(35,324,306)                Provider Inflationary Freeze reduces funding for
                                    Medicaid provider inflationary increases

(15,000,000)                Budget Patient Receipts to Anticipated Collection 
                                    Amount (this reflects the amount of funds expected to 
                                    be collected by implementing uniform co-payment
                                    collections for MH/DD/SAS services)

(4,275,130)NR            Management Flexibility Reserve - reduction of new
                                   positions and operating expenses in the Division of
                                   MH/DD/SAS by 30%

(2,000,000)                Realign MH/DD/SAS Trust Funds for Housing Initiative

(2,000,000)                Vocational Rehabilitation Case Services reduction due 
                                  to decline of consumers served

Community Support

(12,290,298) NR         Community Support program refunds (to Federal gov)

(9,082,049)                Cap Community Support Service hours

(72,000,000)              Tighten Community Support eligibility and service 
                                  guidelines

6,947,373 NR             Allows for phasing in of CS reductions

Other items of interest:

(2,500,000)                 State County Special Assistance reduced to
                                   anticipated level of spending (but rate is increased)

2,853,636                   State County Special Assistance rate increased to $1,207 per month

75,000 NR                   NC NOVA - funds for Adult Care Homes star rating 
                                   award

300,000 NR                 Institute of Medicine study funds - includes DD study

198,846                      Mental health screenings in adult care homes (850
                                   ongoing screenings)

1,905,648 NR              Mental heath screenings in adult care homes (screen 7,800 first year)

59,186                        Money Follows Person grant implementation

(262,709)                    Expected savings from Money Follows person 
                                   implementation

30,000                        Autism awareness and education video for public 
                                   officials

200,000 NR                 Beyond Academics: Intellectual Disability Transition
                                   Program

787,918                      Increase staff at Health Services Regulation for
                                   reviewing construction plans, offset by increased fees

34,110                        Same as above - one time expenses

Budget Special Provisions include a number of policies for the use of funds and implementation of programs outlined in the expansion and reduction items that impact persons with mental illness, developmental disabilities and addictive diseases. The following is a summary of each of the provisions. For the full provision language please see the final version of the budget, H2436 and also the Technical Corrections Bill H2438 at http://www.ncleg.net/. There are a significant number of provisions including changes to Medicaid appeals for recipients and providers, Community Support Services, and provider accreditation. It expands single stream funding and returns utilization management and review to the LMEs, to name a few changes. Special provisions and technical corrections have been integrated in the summary below.

Ticket to Work Implementation Date {Section 10.8} The Department of Health and Human Services shall implement the Ticket to Work Program on July 1, 2008 whether or not the new MMIS system is operational. [It was reported during the budget process that the new MMIS, Medicaid Management Information System, will not be ready for an estimated three years. North Carolina's implementation of a program to allow disabled individuals who are retuning to work to buy into the state Medicaid program had been tied to the use of the new system until this special provision.]

Medicaid Provider Performance Bonds Section {Section 10.36 (e) (1 and 1a)}. DHHS may require that Medicaid-enrolled providers to purchase a performance bond of no more than $100,000 or ask for a letter of credit honoring demand for an equivalent amount as a requirement of enrollment, re-enrollment or reinstatement. DHHS may also waive this requirement based on specific standards such as a providers amount of monthly billings, length of time providing services in the state, quality of performance, and a need to ensure adequate access to care. [Although the changes here apply to all Medicaid-enrolled providers, the drive behind requiring some providers to have performance bonds is the result of Community Support cost overrides and suspected fraud and waste associated with the service.]

Mental Health Changes {Section 10.15 (a thru ee)}- the following sections cover changes in the special provisions to the delivery of mental health, developmental disability and substance abuse services.

10.15 (a) Allows DHHS and DMH/DD/SAS to adjust the timing and method by which funds are distributed at the start of the fiscal year to LMEs with single stream funding. This DHHS and LOC recommendation is an effort to ensure LMES to get state funds more quickly and get services underway earlier in the fiscal year so that funds are spent and service delivery is not interrupted.

10.15 (b) Allows DHHS, DMH/DD/SAS to utilize at least 8 million dollars of currently allocated funds to establish additional regionally purchased and locally hosted substance abuse services.

10.15 (c) Expands single stream funding to the rest of the LMEs by asking the Department to "encourage the conversion of the remaining non-single stream LMEs to single stream." DHHS shall develop prompt-pay guidelines as part of single stream funding guidelines. DHHS shall develop standards for the removal of single stream designation. First year single stream LMEs would have a 6 month grace period to comply with requirements.

10.15 (d) DHHS shall simplify IPRS the state integrated reporting and payment system to encourage more providers to serve state funded clients, this includes working with LMEs to develop billing codes for activities lacking such codes.

10.15 (e) DHHS shall consult with LMEs and providers to determine the reason for over and under expenditure of state service dollars and shall take the action necessary to address the problem. A report on the problem and recommendations for Legislative action is due House and Senate Appropriations, Fiscal Research and the LOC on MH/DD/SAS by January 1 2009.

10.15 (f) DHHS shall perform a services gap analysis of the MH/DD/SAS system. The analysis cannot be done by an outside entity and DHHS needs to involve LMEs in performing the gap analysis. DHHS shall report the results of the analysis to House and Senate Appropriations, Fiscal Research and the LOC on MH/DD/SAS by January 1 2010.

10.15 (g) Secretary of DHHS must provide a written report to the Governor assuring that the on the day of opening and thereafter, Central Regional Hospital will be operated "in a manner that provides a safe and secure environment for its patients and staff." After the report is provided, DHHS may move patients from Umstead Hospital. Dix Hospital patients may not be moved to CRH until an inspection "indicates no findings of noncompliance with conditions of participation from CMS" and the Secretary finds that CRH is in compliance with JCAHO standards of accreditation.

10.15 (h) Allows DHHS to open and operate on a temporary basis up to 60 beds at the Wake Unit of Central Regional Hospital on the Dix campus. They may maintain the unit until beds become available in the system.

10.15 (i) The General Assembly intends to fund the CRH Wake Unit for three years and the Office of State Budget and Personnel shall establish positions at the Wake Unit as time limited positions for up to three years.

10.15 (j) The 5 million for 30 mobile crisis teams will be distributed to LMEs. New crisis teams will be distributed across the state according to need as determined by DHHS.

10.15 (k) New funds are appropriated for purchase of local psychiatric inpatient beds or bed days. The beds or bed days should be distributed across the state. The Department will contract with LMEs and local hospitals for the management of these beds, but local inpatient beds/bed days will be managed and controlled by the LMEs. Funds will be held in a statewide reserve at DMH/DD/SAS to which the LMEs shall remit claims for payment of beds/bed days. Prompt payment provisions are included. The Department may remove the contract and contract with another LME for management of local beds if the LME does not effectively manage beds or comply with prompt payment. These funds shall not supplant other funds currently allocated for the purchase of local inpatient beds.

10.15 (l) 1.8 million and 1.1 million is to be distributed to six LMEs to fund six crisis teams distributed across the state for the START crisis model for persons with developmental disabilities. 

10.15 (m) Funds respite beds for individuals with developmental disabilities distributed across the state.

10.15 (n) The 6.1 million in funds for walk-in crisis and immediate aftercare shall be distributed to LMEs to support 30 psychiatrists and related support staff based on need determined by the department. It includes 1.6 million to be used for telepsychiatry equipment to be owned by the LMES.

10.15 (o) Affordable housing supported by funds in the budget should be sued to support housing for people at SSI income levels.

10.15 (p) DHHS shall implement the CAP-MR/DD program tiered waiver with 4 tiers: up to 17,500; between 17,501 and 45,000; between 45,001 and 75,000; and between 75,001 and 100,000. The department will review on a case by case basis funding requested above 100,000 and may authorize lager amounts based on standards developed by the Department. 

10.15 (q) Allocates 10 million in funds for CAP-MR/DD tier one slots, with an expected first year delay in the program equating to 6.6 million in funds budgeted for the first year. Allows for funds to be allocated for 1915 (c) and Piedmont 1915 (b) waivers.

10.15 (r) DHHS shall implement a plan to catch up Piedmont Behavioral Health CAP-MR/DD slots to the state average by allocating 1% of turnover funds to PBH each year until the slots reach the state per capital average.

10.15 (s) The North Carolina Institute of Medicine shall study and report on the "transition of persons with developmental disabilities from one life setting to another including barriers to transition and best practices in successful transitions.  The provisions outline several groups/transitions that should be included in the study including high school, those with aging parents, and from DD centers to other settings. The report is due March 1, 2009.

10.15 (t) Up to five % of developmental disability funds shall be used to help successfully transition individuals from DD centers to the community. DHHS is required to report on the progress of LMEs providing successful discharge planning for individuals to House and Senate Appropriations HHS Subcommittee, Fiscal Research and the LOC on MH/DD/SAS by March 1, 2009.

10.15 (u) DHHS is to review State-County Special Assistance rates to develop an appropriate rate for special care units for persons with a mental health disability, including individuals with Traumatic Brain Injury (TBI). DHHS will review rules pertaining to special care units to see if additional standards are necessary.  Report on findings is due January 1, 2009.

10.15 (v) Veterans and their families will now be included in the target population for MH/DD/SAS services.

10.15 (w) This provision requires a service authorization process that requires a comprehensive clinical assessment to be completed by a licensed clinician prior to service delivery, except where this would impede access to crisis or other emergency services. Licensed professionals must indicate if they had direct contact with the consumer and have reviewed the consumer's assessment. Non-compliance would be reported to the professional's licensing board. DHHS must report on the development of the authorization process by October 1, 2008 and cannot implement the new process until 15 days after notifying House and Senate HHS Appropriations Sub Committees and the LOC on MH/DD/SAS.

10.15 (x) This provision returns service authorization, utilization review and utilization management functions for all clients (including Medicaid services) to the LMEs. These functions under Medicaid are currently contracted to a single statewide UR/UM vendor, Value Options. UR/UM for state funded clients already resides with the LMEs. The provision requires DHHS to develop a plan for the LMEs to do UR/UM by February 1 2009. LMEs providing UR/UM functions must be nationally accredited or show that they have submitted an acceptable application for national accreditation. They must demonstrate they are ready to meet the requirements of the existing vendor contract. By July 1, 2009 UR/UM functions must be returned to LMEs representing at least 30% of the states population. The provision prevents the renewal of the Value Options contract beyond September 30, 2009. It asks DHHS to "provide information and recommendations to the 2009 General Assembly so that it may consider whether to authorize the Department to contract with an outside vendor for these functions beyond September 30, 2009."

10.15 (y) Requires DHHS to study Medicaid waivers, such as 1915 (b) and 1915 (c), for all LMEs. It asks DHHS to recommend strategies to increase LME management flexibility in their approach to managing care, providing case management, limiting provider networks and other innovative approaches for managing care. Report on findings is due March 1, 2009.

10.15 (z) Directs DHHS to declare Piedmont Behavioral Health (PBH) a demonstration model in the PBH LME catchement area, including its 1915 (b) and (c) waivers, single stream funding, and funding transferred from state institutional budgets.

10.15 (aa) Prevents the Secretary of DHHS from taking action to merge or consolidate LMEs currently in existence or "establish consortia or regional arrangements for the same purpose." It makes exceptions for LMEs that do not meet the catchement area requirements and the Guildford, Mecklenburg, and Smoky Mountain LMEs to continue with implementation of their administrative service organization that would consolidate some LME management functions across the three LMEs.

10.15 (bb) If the Secretary wants to merge LMEs, they would need to submit a detailed plan to the General Assembly for their review. Any plan would need to be developed in consultation with the LMEs and presented to the GA no later than March 1, 2009.

10.15 (cc) Rewrites the statutes that govern the removal and reassignment of LME functions by the Secretary. Under the new provision, an LME would need to fail to meet critical performance measures in the previous three months (was 6 months), the Secretary would have to provide three months of focused technical assistance, and following that technical assistance to fail to or maintain a satisfactory outcome on critical performance measures. At that point the Secretary may contract with another LME or agency to provide the function that had been removed.

10.15 (dd) Defines "minimally adequate services" as "a level of service required for compliance with all applicable State and federal laws, rules, regulations, and policies and with generally accepted professional standards and principles."

10.15 (ee) Rewrites part of G.S. 122C-124. (b) on the suspension of funding and removal of LME functions so that the definition of minimally adequate services conforms with the definition above. Removes the Secretary or the Commission of MH/DD/SA's authority to develop rules for "minimally adequate services."

The next section 10.15A intended to improve and strengthen fiscal oversight of Community Support Services. It has several sections:

10.15A.(a) Requires DHHS to submit a revised service definition for Community Support -adults and Community Support - children/adolescents.

10.15A.(b) The new definition will include a tiered rate structure, under which services that do not require the skill, education, or knowledge of a qualified professional should not be paid at the same rate as those provided by qualified skilled professionals.

DMA has stated that it intends to submit a new definition that includes four rates: licensed qualified professional, qualified professional, associate professional and paraprofessional. All service definition revisions are subject to approval by the Centers for Medicare and Medicaid Services.

10.15A (c) Allows the Secretary to determine which MH/DD/SAS services require national accreditation. Providers enrolled with Medicaid prior to July 1, 2008 that deliver services requiring accreditation have three years to achieve national accreditation. Providers enrolled in Medicaid or who contract for state funded services on or after July 1, 2008 and deliver services requiring national accreditation have one year from enrollment in Medicaid to achieve national accreditation or two years from the start of the first contract to deliver a state-funded service. The provision sets benchmarks for progress toward accreditation to ensure continuity of care for consumers if a provider does not make sufficient progress toward accreditation in a timely manner.  [See the Budget at http://www.ncleg.net/ to read the specific benchmarks]

10.15A (e1) DHHS will implement a temporary new process for community support provider appeals on a temporary basis. This process will substitute for the current informal appeals at DHHS and formal appeals Office of Administrative Hearings (OAH).

10.15A (e2) Outlines the Community Support Service provider appeal process.  The provider appeals process has a number of steps and the full process can be found in the budget bill at http://www.ncleg.net/. Key points are that a petition for a hearing needs to be filed by the provider with the chief hearings clerk of the DHHS within 30 days of a notice of action. The request for appeal will be heard by the DHHS, petitioner and respondent have the right to be represented by the person of their choice and after hearing the case the hearing officer shall decide the case based on a preponderance of the evidence. Final decision rests with the DHHS, although the provider may file a petition for judicial review in Superior Court.  The provision applies to all petitions filed after July 1, 2008 and for all community support provider petitions that have been filed but not yet heard prior to July 1 2008. In addition the requirement to have a decision within 90 days of filing shall not apply to CS service providers that were filed at OAH or requests for a hearing under the departments informal hearing process prior to the effective date if the act. OAH will transfer all cases affected by the provision to DHHS.

10.15A (e3) Suspends endorsement or Medicaid participation of community support providers pending a final agency decision on a fair hearing. The provider is not entitled to payment during the period the appeal is pending. If the decision is in favor of the provider, they will be reimbursed for payments withheld during the appeal.

10.15A (e4) The new community support provider appeals process will expire July 1, 2010. Reports are due to the General Assembly in March and October 2009 and March 1 2010 on the effectiveness and efficiency of the new process.

10.15A (f) amends the Exemptions form contested case statutes to conform with the new community support providers appeals process.

10.15A (g) DHHS shall adopt guidelines for LME periodic review and rules for endorsement and endorsement of providers to ensure provider quality and accountability.

10.15A (h) Re-writes a section of the State MH/DD/SAS appeals panel statute to allow for providers who have been denied endorsement by the LME to appeal to the panel. Allows for waiver of appeals to the panel by the Secretary. The section does not apply to Community Support providers who appeal directly to DHHS under the departments CS provider appeal process.

10.15A (h1). Establishes new appeals process for Medicaid recipients. A short summary follows. To read the full process go to http://www.ncleg.net/ and view the final version of the technical corrections bill H2438  Section 3.13 (a) referring to section 10.15A.(h1) of the budget special provisions. 

DHHS has 30 days before the "adverse determination" (i.e. a denial, suspension, reduction or termination of services) to notify the recipient. The recipient has 30 days from mailing of the determination to request a hearing to appeal this determination. Hearing requests are sent to the Office of Administrative hearings and DHHS. The appeal is heard before an administrative law judge who returns their decision, then DHHS will make a final decision on the case in 20 days.

For contested cases, hearings will be done by an administrative law judge who may limit and simplify the procedures in order to complete the case as quickly as possible. The Mediation Network of North Carolina will contact the petitioner in a contested case and offer mediation in an attempt to resolve the dispute. The petitioner has the burden of proof to show entitlement to services. The agency (i.e. Division of Medical Assistance/DHHS) has the burden of proof when the appeal involves a reduction, termination, or suspension of a benefit (service) that was granted to the Medicaid recipient. The administrative law judge makes the final decision in contested cases.

Two million dollars goes from DHHS to the Office of Administrative Hearings for the mediation service and to conduct appeals. As of October 1, 2008 DHHS is to end its informal appeals process and refer all pending appeals to OAH. The new appeals process expires July 1, 2010. DHHS and OAH are required to report to House and Senate Appropriations, Fiscal Research, and the LOC on MH/DD/SAS three times over the next two years on the costs, effectiveness and efficiency of the new appeals process and make recommendations about continuing it. 

10.15A (i) Makes all community support services subject to prior approval and requires 50% of services to be delivered by qualified professionals. "Sixty days after the tiered rates required under subsection (b) of this section have been implemented by the Department, thirty five percent (35% )of CS services must be delivered by qualified professionals. Six months thereafter fifty percent (50%) of community support services must be delivered by qualified professionals.

10.15A (k) Rewrites section 10.49 (ee) of S.L. 2007-323 - the previous budget act - so that policies adopted by DHHS in response to over expenditures and over utilization of Community Support Services does not apply to CS services offered under a Medicaid managed care, capitated, at-risk waiver (such as Piedmont Behavioral Health).

MHANC will continue to monitor the implementation of the new budget provisions as they move forward. If you have questions about these or other mental health policy issues please contact Jennifer Mahan, Mental Health Association in North Carolina Director of Policy and Advocacy Initiatives at 919-981-0740 x270 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .