Coverage changes raise questions about mental health provider

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.

"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.

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.

"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.

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."

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