Millions of Medicaid Payments Withheld; Report Says Wake Mental Health Badly Managed

The state's mental-health system has struggled for years with problems in patient care and claims of abuse. Many critics blame reforms, signed by Gov. Mike Easley in 2001, that decentralized the system to save money and offer more varied services.

Wake's performance ranked in the bottom of three tiers among 25 local-management entities (LMEs) rated in three categories: financial and business management operations, information-technology and claims management, and clinical operations and governance.

County officials emphasized that the evaluation looked at management, not the quality of care.

"This report was not about direct services," Ramon Rajono, director of Wake County Human Services, said. "It was about how quickly we pay the bills, how quickly we process the claims."

The Cumberland County Mental Health Center and the Johnston County Area Mental Health, Developmental Disability and Substance Abuse Authority also ranked in the bottom tier of LMEs overall, along with two other agencies.

Eastpointe – serving Lenoir, Sampson, Wayne and Duplin counties – was the only other LME ranked in the lowest tier in all three categories.

The federal Centers for Medicare and Medicaid Services announced Wednesday that it will defer a quarterly payment to the state's Community Support Services program. Federal officials cited concerns that the state program has mismanaged Medicaid funds in the past.

CMMS said the withheld payment was $175 million, while the state estimated it at $137 million. A follow-up from the federal agency said the payment may have been over-estimated.

State officials have acknowledged that private providers in the new program overcharged the state or provided poor care, leading to millions in wasted taxpayer dollars.

Although the state Department of Health and Human Services began some corrective action in August, CMMS said it would defer the quarterly payment until the state forms a comprehensive plan of action.

CMMS is "not able to determine the 'good' expenditures from the 'bad' expenditures, resulting in us having to defer the entire amount," a CMMS official wrote in the April 16 notice.

The department's secretary, Dempsey Benton, addressed providers' ability to process Medicaid and obtain national accreditation in a three-year plan to reform the state's mental health-care system. He proposed the plan to a legislative committee Thursday.

The plan would revise the appeals system for Medicaid providers and recipients.

All current Medicaid providers in the system must get national accreditation by 2011. Providers that join the system will have two years to get it.

DHHS officials pointed out they have already imposed a moratorium on new providers and administrative sanctions, such as withholding payments to the state Medicaid program.

Community Support expenses dropped 22 percent from the third quarter of 2007 to the first quarter of 2008, according to DHHS.

Benton outlined other mental-health reforms that Easley will try to get passed in the General Assembly this year: centralizing management of the system, increasing funding for state psychiatric hospitals and expanding crisis services.

Benton proposed consolidating the state's 25 LMEs into nine and creating three regional management entities to oversee them. The three-year process to do so would be voluntary and incremental, Benton said.

"At this time, the State-LME arrangement does not meet the general definition of a 'system," Benton wrote in a memo to the legislative committee. "It is more realistically described as 25 separate systems of management."

Managing resources regionally, Benton argued, will encourage cost savings and resource sharing, so that more money can be reinvested into services. The state currently pays $132 million in administrative costs for LMEs.

Benton also recommended increasing funding to increase state oversight of psychiatric hospitals, including more internal inspections.

More workers should be hired to increase staff-to-patient ratios, and recruitment incentives should be offered to get those new workers in the door, Benton argued.

He also proposed that the state budget money for its share of the 60-bed adult admission unit at Dorthea Dix Hospital, which will open in July.

Easley has ordered that local medical examiners investigate all deaths at state psychiatric hospitals. Advocacy groups claim that a lack of planning and coordination with local services has lead to the deaths of discharged patients.

Benton said the governor will ask the state Legislature to expand crisis services by creating a statewide network of 30 mobile crisis teams. New staff positions should be created for walk-in crisis-care centers across the state, and 187 community inpatients beds should be available around the clock.

The full findings of the s independent evaluation will be available in early May while Easley considers which mental-health reforms he will press the Legislature to pass once its short session begins in mid May.

The Mental Health Oversight Committee recently issued its own report, which identified psychiatric hospitals, crisis centers and accountability as areas that need immediate attention.