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Budget cuts take further toll on mental health system

By Taylor Sisk
Staff Writer
This story is the fourth in a series about the real and potential effects to Orange County residents of state budget cuts. This week, we look at the mental health system.

These are especially trying days for North Carolinians living with mental illness – particularly those without the means to pay for much-needed services – and for those who provide these services.

Last year, the state Department of Health and Human Services announced that it was making yet another sweeping overhaul of our mental health care system, meaning most providers either had to amp up their operations or lose public funding.

Now comes a new round of budget cuts.

These cuts, said Tim Brooks, co-director of Carolina Outreach, a local nonprofit offering programs for young people with behavioral issues and their families, “represent a whittling away of the very thin margins that we have already been facing.”

When reform of the state’s mental health care system in 2001 brought privatization, many veterans of that system warned that mental health care was a tough place to make ends meet while effectively providing the services that are critical to hundreds of thousands of people in this state.

That assertion continues to become more evident.

Harder still
Money for services funded by the state for those not eligible for Medicaid is limited in the best of times, but will be more so in the next two years. Medicaid funding has also been cut. (The Medicaid program is operated jointly by the state and federal governments, with the feds paying approximately two dollars to every dollar the state puts into it.)

The money for services funded strictly by the state flows through local management entities (LMEs). OPC Area Program is the LME that serves Orange, Person and Chatham counties.

With the 2011-12 budget, the legislature stipulated that LMEs must use their existing fund balances to offset reductions in service funding. According to OPC area director Judy Truitt, the LMEs were required to backfill a $25 million reduction in service dollars, and were “strongly encouraged” to backfill an additional $20 million.

Truitt said that OPC’s share of that $25 million is $954,257, and its share of the additional $20 million is $612,198.

“At this point,” Truitt said, “we are planning to cover both the required and recommended adjustments.” She said that she doesn’t anticipate a “change to the continuum of care in our communities.”

“We had been forewarned about the likelihood of cuts that could range between 5 and 15 percent,” said Julie Bailey, interim executive director of Mental Health America of the Triangle, of her organization’s state funding. A delay in receiving the money from the state has been more of an issue than the reduction.

But what must also be considered are the cuts to the state’s share of Medicaid funding – $354 million, which, with the federal matching dollars factored in, comes to just over a billion dollars lost.

Overall, these budget cuts are going to make it much harder to serve the uninsured, said Bebe Smith, co-director of the UNC Center for Excellence in Community Mental Health. “And some of the cuts to Medicaid are simply inhumane.”

As an example, Smith cites the elimination of Medicaid coverage for dental care.

“Many of the people we serve have poor health in general,” Smith said. “I’ve seen people in agony with tooth pain, through neglect of dental hygiene and the great difficulty in accessing dental care if you are poor.

“We’ve worked hard to get our Medicaid clients connected to dental care. Now that Medicaid will no longer pay for it, I don’t know how we’ll get them what they need.”

That said, Smith believes the state is overly reliant on Medicaid to fund mental health services. Many with serious mental illness don’t have Medicaid; they fall through the cracks in the system with too much income to qualify, but not enough to pay for insurance.

Among the Center for Excellence’s programs is Outreach and Support Intervention Services (OASIS) for adolescents and young adults who are experiencing, or are at risk of experiencing, early psychosis.

“Many of the young people newly developing psychotic disorders are likely to have no insurance; they are not yet disabled, but struggling greatly,” Smith said.

She tells of a young man who has been homeless for nearly a year, has a serious mental illness and got into legal trouble while ill.

“He has just been turned down for benefits from Social Security, and so is not eligible for Medicaid,” Smith said. “He may not be disabled, but life has been very tough.”

Now there are fewer dollars still to provide for the uninsured.

A very thin margin
The latest overhaul of the state’s mental health care system, was the creation of a new designation of provider. The Critical Access Behavioral Health Agency (CABHA) consolidates mental health, developmental disabilities and substance-abuse programs within fewer, larger providers. Under the new system, service providers who wish to continue to receive federal and state funds must offer an array of state-mandated services. Some exceptions are made to providers offering a few specialized services.

Meanwhile, the state is also moving to a managed-care system. As opposed to a fee-for-service system, under which the state has been operating, service providers are given one pot of federal, state and local dollars and must determine what services are required by each client and at what level. Client options are often limited under managed care; it’s designed as a means of controlling costs while striving to ensure quality of service.

These changes, combined with budget cuts, create a precarious situation for providers – and, of course for those with mental illness.

Carolina Outreach has made the necessary changes to become a CABHA, and has now been certified by the state as such. But, said Tim Brooks, the expenditures involved, and now the budget cuts, has “created a real burden.”

“The state is asking us to hire more people and increase our administrative duties while simultaneously cutting reimbursements,” Brooks said.

“So far, what we have seen are across-the-board cuts that don’t take into consideration what is working and what is not working in the system.”

The state is “trying to legislate quality,” Brooks said. “What we need is the freedom to try some creative solutions to reach folks while spending less money.”

He suggests, for example, more preemptive services that keep people out of hospitals.

He’s concerned about clients who come in for one visit, exhibiting stress, but then don’t return.

“We want the freedom to go out in the community and find out what’s going on with that person,” he said. “We do that now, but with what’s going on” – budget cuts and the restricting and restructuring of services – “I’m afraid we won’t be able to continue to.”

Brooks is nonetheless optimistic. He hopes that managed care will allow for some flexibility.

Julie Bailey, too, is preferring to look on the bright side of things – and as both an administrator of services and the mother of children with special needs, she has a rich perspective.

“One of the things these changes have caused is our community to look at ourselves and figure out how to fill the gaps,” she said. “I think we’ve done a pretty good job with that.” She cites, for example, the Pro Bono Counseling Network, which OPC funds.

“This system is not perfect,” Bailey said, “but we need to know how to work in it.”

  1. Richard Edwards

    This statement from the article is not completely accurate.

    “Meanwhile, the state is also moving to a managed-care system. As opposed to a fee-for-service system, under which the state has been operating, service providers are given one pot of federal, state and local dollars and must determine what services are required by each client and at what level.”

    Actually, the future Managed Care Organizations–formerly the Local Management Entity, like OPC–will be responsible for managing allocated funding, but it is still a fee-for-service system. Providers are paid based upon unit cost reimbursement, and, only in rare instances, on a per member per month basis.

    Further, while service providers do clinical assessments to assure individuals meet the qualifications for services, the actual services provided and the amount of services provided must be authorized by the MCO or LME.