New report critical of DHHS spending
Posted August 20, 2008
Raleigh, N.C. — More than two years after the state began privatizing the mental health system, a new legislative report out Wednesday criticizes how the Department of Health and Human Services handled the implementation.
The report, the result of a five-month study, found DHHS had no controls in place when it began privatizing the mental health system and never established goals or benchmarks. Nor did it adequately forecast costs or have appropriate planning and communication, the authors said.
As a result, the system was abused, and the agency spent millions of dollars more a year – sometimes up to 200 percent – than anticipated.
For example, monthly expenditures for children and adolescents grew from $4.5 million in April 2006 to $61.8 million in February 2007.
The report was presented Wednesday to the Joint Legislative Program Evaluation Oversight Committee.
"It appears to me that some of these decisions almost rise to the level of being criminal, Co-Chariman Rep. Drew Saunders, D-Mecklenburg, said. "And looking at this report is almost like looking at crime-scene photos. I mean, it's gory."
The Division of Mental Health, Developmental Disabilities and Substance Abuse Services became aware of the spike in costs in Fall 2006, months after introducing the changes.
The report said the division immediately took steps to reduce costs, for example, by putting a freeze on new providers and redefining service definitions, as well as recouping payments.
An audit of 167 providers and a review of 12,000 records found 36 percent of community support services were not medically necessary. Another 53 percent were not authorized at the appropriate level.
Leza Wainwright, co-director of the division, says the cost of community support services is now 30 percent lower than it was last August.
The committee authorized its staff to begin drafting legislation that would address the issues in the report. That should come out sometime later this year.
The report also recommended that DHHS re-evaluate its current data and reporting processes so that its executives can readily identify key issues and respond purposively.