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Senate adds Medicaid reforms to bill on mental health groups

Posted June 16
Updated June 19

— Legislation aimed at curbing salaries for top executives at North Carolina's regional mental health providers could be in jeopardy after Senate Republicans moved to revisit the 2015 Medicaid overhaul in the measure.

Rep. Donny Lambeth, R-Forsyth, a key House negotiator on Medicaid issues, told The Associated Press "there's no way" his chamber can agree with dramatic changes made to the bill by a Senate Health Care committee on Thursday.

They've "changed it enough and gutted it enough that ... it's really a concern to us," Lambeth said, adding the bill no longer addresses fundamental issues with the mental health agencies. He also said the revisions would change prior agreements on Medicaid reform.

The measure was originally intended to address how money is spent at the state's seven mental health agencies, which receive taxpayer funding to manage and monitor services for the mentally ill, substance abusers and people with developmental disabilities.

A performance review by State Auditor Beth Wood's office found that Cardinal Innovations Healthcare Solutions made $1.2 million in unauthorized salary payments to its current and former CEO since 2014, exceeding the $187,364 maximum salary set for such positions by the state. The audit also accused Cardinal of "unreasonable" spending on board retreats, meetings and travel totaling more than $250,000 over two years. More than $18,000 was spent on a Christmas party alone, the review found.

Sen. Tommy Tucker, R-Union, said he's concerned that the new bill would do little to address Cardinal's actions, adding the revisions have "watered down the directness" of the original bill. The previous version of the House bill would have capped the top leader of any mental health agency from getting paid more than 30 percent above what leaders at the other similar agencies statewide were making.

Other critics also worry that the changes could derail the state's mental health system by speeding up the process of merging physical and mental services for Medicaid recipients. The bill calls for all of the state's regional mental health providers to be dissolved when Medicaid reform begins, which is expected to occur in roughly two years.

"This is a massive effort we're about to undertake," Sen. Jeff Tarte, R-Mecklenburg, said, mentioning his concerns with the new bill, which now heads to the Senate Rules Committee for consideration.

Two years ago, Republican lawmakers and then-Gov. Pat McCrory agreed to overhaul Medicaid, which serves 1.8 million North Carolina residents – mainly poor children, older adults and people with disabilities.

The traditional system of doctors getting reimbursed for each service performed will be replaced by one in which the state contracts with commercial managed-care companies or local hospital or doctor networks. Those networks will receive a set amount to treat each Medicaid patient served.

Aside from making changes to the state's Medicaid program, Senate President Pro Tem Phil Berger said in a statement Thursday that the new bill would help address findings from the audit by banning the state-funded mental health agencies from spending tax dollars on "alcohol, first-class airfare, charter flights, holiday parties or other social gatherings."

The release also said that the bill would "generate close to $1 billion to be used for new mental health services as soon as the acceleration is complete."

"These reforms will immediately ensure greater accountability and transparency on how tax dollars are spent, and in the long-term they will speed up the process to integrate care and achieve better health outcomes for many of our state's most vulnerable citizens," Sen. Ralph Hise, R-Mitchell, who presented the revised bill.

Ashley Conger, a Cardinal spokeswoman, said in an email Friday that the agency was reviewing the updated bill and would "support the state's efforts to create a healthcare system that values outcomes and equally serves all."

In response to the audit, Cardinal defended its actions as lawful, arguing that a salary range set for mental health area directors such as its CEO Richard Topping was not legally binding on Cardinal.

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