Coverage changes raise questions about mental health provider

Posted November 17, 2015

— Lawmakers and advocates are raising questions about whether Cardinal Innovations, publicly funded nonprofit that provides mental health services, is cutting back services to vulnerable residents contrary to a state budget mandate.

Those concerns were sparked by an advisory Cardinal sent Nov. 11 – Veterans Day – that it would phase out 11 state-funded services for people with a variety of mental health issues. The agency is one of nine LME-MCOs that provide publicly funded services to those with mental health, substance abuse and developmental issues. Its service area stretches from Charlotte into the Triangle, including Orange, Person and Chatham counties.

The changes Cardinal announced could run counter to a specific directive in the state budget that each LME/MCO provide the same level of patient services over the next two years despite being asked to contribute to $260 million the agencies are supposed to hand back to the state government during the same time period.

"I think there's going to have to be a very serious examination of what Cardinal is proposing to do because it appears to me that is contradictory to the very clear direction of the budget," said Rep. Nelson Dollar, R-Wake, a senior budget writer who has been deeply involved in health policy.

Cardinal executives insist their agency will be providing the same level of services but is making changes in order to cope with budget changes passed down from lawmakers and in anticipation of the coming rigors of Medicaid reform, which will reorder how the state deals with health care for the poor and disabled.

Richard Topping "The law says we've got to maintain the same level of service," Richard Topping, chief executive of Cardinal, said Monday. The question, he said, is "how do we find a sustainable way to fund care for these populations."

Still, Cardinal's announcement took lawmakers, advocates and regulators by surprise.

"We're still having talks with them. We have more questions," said Courtney Cantrell, director the state Department of Health and Human Service's Division of Mental Health, Developmental Disabilities & Substance Abuse.

In response to a records request, a DHHS lawyer told WRAL News that a search of records showed that Cardinal did not give the state formal notice of its planned changes.

Tapping different streams

Local Management Entities like Cardinal are essentially small insurance companies that care for those with mental health issues in a defined region. However, instead of being funded by member premiums, the agencies are government contractors bankrolled by Medicaid, a program jointly funded by the state and federal governments{{/a}}, as well as state appropriations, which cover services and populations that Medicaid doesn't fund.

Those agencies were asked to hand back $110 million in reserves generated from state appropriations for the current fiscal year, which started July 1. They will be asked to hand back another $150 million in 2016-17, according to the budget that passed in August. However, budget writers made clear that the money returned to the state was not to come from cutting services, even if the agencies depleted their reserves and still had more to pay back.

"The reasons the reserves have grown is they haven't provided all the services they could be," said Rep. Donny Lambeth, R-Forsyth, a budget writer who is deeply involved in health policy.

The intent of the hand-back arrangement, Lambeth said, was to encourage LME-MCOs like Cardinal to do more with their state funding, not less.

"They certainly don't need to be cutting back services," he said.

However, Cardinal's Veteran's Day advisory says the group will eliminate 11 different services, including things such as community support teams that help those with mental illness stay out of institutions and personal care and day support services aimed help helping those with intellectual disabilities live more independently.

Topping stressed that nobody cared for by Cardinal would lose those services but would be "grandfathered in." Cardinal's initial advisory was unclear, he said, pointing to a second effort to better describe how patients new to Cardinal would be cared for.

"Because of the cuts this year," Topping said, "we've got to get really smart and really efficient about the new folks coming in."

It appears, Topping said, that lawmakers plan to ratchet back the amount of state funding coming in to the mental health care system. So, Cardinal is making changes that will place patients first in services covered by Medicaid and in programs paid for through money left over from Medicaid, known as "B3 services" in industry shorthand. State funding, he said, would be a last resort. Each of the services Cardinal is eliminating would be replaced by an equivalent service paid for by Medicaid or B3.

Not everyone has Medicaid

But DHHS' Cantrell said it's unclear from information that her agency has gathered how exactly those planned changes will work.

"It wasn't really clear in their bulletin exactly what they're doing," she said.

Lawmakers and advocates point out that there are some services that only the state pays for. As well, there are some patients who rely on LME-MCOs but are not eligible for Medicaid.

Children with autism and those with developmental disabilities could be particularly affected by the changes, said Julia Adams-Scheurich, director of government relations for The Arc of North Carolina, an advocacy group for developmentally disabled. It's unclear, she said, how those patients will be handled and how Cardinal will make sure all of their patients get the same level of support, as required by the budget law.

She also pointed out that the changes were first announced on a holiday and come just before Thanksgiving, a time when many families are traveling or otherwise more likely to miss key announcements.

"This is the first time that we can point to something and say we're not sure that this is something that meets that bar," Adams-Scheurich said.

Topping said that those who don't qualify for Medicaid would receive the same services. They would just be paid for out of state funding.

"Our goal is to move all eligible members to Medicaid-funded services," he said. "This will ensure that state-funded services are available for members who may not qualify for Medicaid. This allows us to maximize all available resources to meet the needs of our members."

Still, Dollar said, lawmakers are likely to have questions about whether their directives are being followed. He said questions about Cardinal's announcement are likely to come up during a meeting of the {{a href="blogpost-15115460"}}General Assembly's Joint Legislative Commission on Governmental Operations on Wednesday, which is already scheduled to deal with questions surrounding LME-MCOs.

Lambeth said that a separate committee that is specifically focused on health and Medicaid issues may take up the question in December.


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