The state agency in charge of implementing new mental health rules this year says those changes will save money and improve quality, but some providers see it as a knee-jerk reaction that will limit access to services and put people at risk.

The Department of Health and Human Services has announced an overhaul of its mental and behavioral health model that will consolidate the state’s network of providers in six months.

“The biggest problem is they’re trying to implement sweeping changes across the system and they’re not giving us time to do it,” said Raymond Turpin, CEO of Jackson/Haywood County Psychological Services.

Turpin and other local behavioral health providers are concerned that the new program, dubbed the Critical Access to Behavioral Health Agency or CABHA, will put small providers out of business in the short run and threaten the stability of the provider network long-term.

CABHA is designed to create a new set of standards and requirements for behavioral health providers that use state and federal mental health funding. The range of services from providers include substance abuse counseling, crisis intervention, psychological assessments, and treatment for mental health issues like depression.

Under the new rules, mental health service providers must have a full-time psychiatrist on staff, national accreditation, and take on additional administrative duties in order to bill through Medicaid — which are tall orders for a small office of counselors.

Whether it succeeds in improving the quality and integration of services, CABHA will most certainly instigate a rapid consolidation of the provider network in a short time frame.

“The environment is going to become more and more harsh for smaller providers,” said Brian Ingraham, CEO of Smoky Mountain Center, the local management entity that oversees mental health services in WNC. “The state is clearly going in the direction of larger consolidated providers.”

Streamline or rollback?

When CABHA is introduced in July, many small providers who aren’t able to meet the program requirements will not be able to bill Medicaid-funded services, forcing them to close, contract with other companies, or lay off staff.

Marcia Lewis –– executive director of Mountain Youth Resources a provider of mental health services that contracts with Macon County Schools –– runs one of the small providers that stands to lose as a result of the changes.

Lewis said her agency could potentially join up with one of the new CABHAs, but is in limbo until the state makes key decisions about how providers will be reimbursed, from what type of services are eligible to the hourly billing rate. Until then, there is no way for companies to create a new business model.

“My own personal view is the state is reacting to things without thinking them through and without determining how they’ll operate and in the meantime clients will suffer,” Lewis said.

Lewis said the CABHA program will add another level of bureaucracy to the service delivery system and create a new layer of costs.

“They keep adding levels of cost instead of levels of service,” Lewis said.

Lewis’ complaint gets at the philosophical debate underpinning the current changes. During the state’s 2003 reform effort, the implementation of community support services was a wide-ranging attempt to offer people in need of behavioral health services more contact with their providers.

The community support model failed. But while the providers that billed for community support agree that its cost spiraled out of control, they also maintain that the state’s poor implementation of reform deserves the lion’s share of the blame for its failure.

“North Carolina was moving so fast that we were being pushed to implement services even before the service definitions were set,” Turpin said.

Turpin said his agency spent big money bringing in state-mandated trainers who couldn’t even explain what types of services community support would cover. He fears the newest round of changes will be managed the same way, preferring a political mandate to the reality on the ground.

Either way, with the General Assembly ordering the department to kill community support by July, systematic change is a political reality.

“The time frames are what we have to deal with,” Watson said. “We’re operating with specific direction from the General Assembly to phase out community support by June 30.”

So far the DHHS has gotten letters of interest from 200 providers who want to establish CABHAs and 20 full applications. Ingraham said he thinks the state will end up with around 100 CABHAs, and only three or four in WNC.

Turpin said the rapid consolidation will hit rural areas hardest, because many people who need services won’t know where to go to get them.

Watson acknowledged access could be an issue initially.

“There may be some access issues initially and that’s something we’ll have to monitor closely with the LME’s,” Watson said.

Duncan Sumpter, CEO of Appalachian Community Services, a mid-size provider that serves rural Graham, Cherokee, and Swain counties, sees the consolidation as a step back to a model that prioritizes economics over human needs.

“There’s a difference between covering a community and serving a community,” Sumpter said. “As we move back towards consolidation, we may go back to covering instead of serving.”

Between theory & practice

Turpin believes the requirement that CABHAs maintain a full-time psychiatrist as an administrator is a deliberate attempt to put rural providers under the gun.

“Now they want to go back to a few huge Wal-Mart agencies and they’re using the psychiatrists as the magic bullet to wipe us out and make room for some national provider to come in and take over,” Turpin said.

Brian Ingraham –– CEO of Smoky Mountain Center, a regional entity that manages the network of private providers –– said psychiatrists are already a scarce resource in the state’s rural areas and shouldn’t be used as administrators.

“The psychiatrists we have now in this part of the state need to be working in a clinical and medical capacity, not in an administrative one,” said Ingraham.

Watson explained that the requirement is intended to create built-in medical oversight in a system that supports medical programs.

“These are Medicaid services and they are supposed to be medically necessary,” said Watson. “With community support you had a program where 90 percent of the providers were high school graduates.”

The difference of opinion over the medical director requirement points to a lack of trust between the state and its provider network.

The state feels it has been burned by providers milking the system. Its providers contend the state never defined its programs in a way they could be administered properly.

Ingraham believes the CABHA program is based on good theory, but he wonders whether the short timetable slated for its implementation will create a new kind of problem.

“The good news is it’s an opportunity to integrate services that really should be bundled under one roof because we are dealing with a fragmented system right now,” said Ingraham.

Not every provider sees CABHA as a threat and most providers agree that the system could benefit from a more regional approach in which services are better integrated.

For instance, under the current system a patient could receive counseling from one agency but their prescription from another.

Joe Ferrara, CEO of Meridian Behavioral Health based in Waynesville, said CABHA could improve the quality of behavioral health services. Ferrara agrees with Watson that the reform effort didn’t work.

“There was a belief that there was going to be collaboration from the providers that would create continuity of care, but it never really happened,” said Ferrara. “The reason community support was removed, let’s be frank, was because the costs associated with it went through the roof.”

But Ferrara also fears that the CABHA program will operate in practice as an unfunded mandate.

“Whenever there are unfunded mandates for the provision of services, the state uses the explanation that they will tweak the rates for the services,” Ferrara said.

The state has promised that the added administrative costs CABHA mandates will be offset by an increased billing rate for case management services, the program that will replace community support.

The state’s budget crisis has created the political reality that those changes must be made by the end of July. In the past year, the state has already cut $40 million out of its mental health system and cuts may be even deeper in the next budget cycle.

With providers strained, the task of overhauling their business models in six months in response to CABHA could force some of them out of business. Even the providers who are well positioned to weather the changes question the wisdom of such a narrow time frame.

“Providers are reeling and all of the sudden they’re going to introduce CABHA and they’re saying the costs will be picked up in the billing rates for case management,” said Ingraham. “Well I really hope so because if not we’ve created a big mess. There’s a lot of risk there.”

The road ahead

At the root of the debate over CABHA is a discussion about winners and losers. Some middle-sized behavioral health service providers stand to grow as a result of the consolidation. At the same time, the regional entities like Smoky Mountain Center that oversee the network of private providers will lower overhead costs by dealing with fewer agencies with better built-in oversight capacities.

Meanwhile though, in Western North Carolina’s rural areas, the people who rely on services will almost certainly face a reduction in service hours and some will likely deal with an interruption in services. In addition, some service providers will likely go out of business entirely.

In the seven western counties, three existing service providers have already begun the process of applying for CABHA certification –– Haywood and Jackson County Psychological Services, Meridian Behavioral Health, and Appalachian Community Services.

All three businesses were created by former employees of the Smoky Mountain Center when the provider network was privatized during the 2003 reform effort.

Now those businesses and many others are facing competition with national providers and forced consolidation.

“It’s just one more change in a stream of changes along the timeline,” Ferrara said. “This is an incredibly difficult time to be providing behavioral health services in North Carolina.”

Michael Watson, assistant secretary at the Department of Health and Human Services, contends the state’s overhaul of its behavioral health system doesn’t amount to an abandonment of its past reform effort of 2003.

“I wouldn’t call it a rollback of reform, I would call it a response to some of the issues that came out of reform,” Watson said. “I think if you look at reform where we really made mistakes is when we preferred access over quality.”

Under a set of changes called the Critical Access Behavioral Health Agencies (CABHA) program, the state is forcing mental health providers that use Medicaid funding to comply with a new set of requirements by July 31.

According to Watson the changes will improve quality by demanding accountability from private providers.

The most significant new requirement is that any agency that wants CABHA certification needs a full-time psychiatrist on staff to function as a medical administrator two months prior to July 31.

The changes were prompted in part by the state’s budget crisis and in part by criticism of a Medicaid-funded mental health program called “community support”.

Under direction from the General Assembly, DHHS will dismantle “community support” services, a major component of a system-wide reform initiated in 2003. The goal of the reform was to improve access to the public by decentralizing and expanding the netwokk of providers in the private sector.

Community support was a service in which mental health professionals, often without advanced degrees, offered clients mentorship and skill-building in real-world settings. The intent of community support was to deepen the contact between mental health providers and their clients. But at least in some systems around the state, the practice was abused, leading legislators to cry foul that the program was akin to expensive state-sponsored babysitting.

Between 2006 and 2009, the state spent over $800 million on enhanced services and a report by the General Assembly claimed that 97 percent of the money went to community support.

That decision set off a domino effect for services billed through Medicaid and led to a total overhaul of the system.

DHHS Assistant Secretary Michael Watson claims the CABHA program will improve quality and save money at the same time.

“The issue with quality really has to do with the problems with community support and the fact that we were beginning to see similar abuses in the services that would replace them,” said Watson.

Duncan Sumpter –– CEO of Appalachian Community Services, a mid-size provider that serves rural Graham, Swain, and Cherokee counties –– thinks the failure of community support had to do with the way the state administered the program.

“The state is saying lesson learned from community support,” Sumpter said. “But the lesson learned by the providers is the rules were never clear and some people took advantage of it.”

CABHA affects businesses that provide “enhanced services,” a catch-phrase for a menu of Medicaid-funded behavioral health services for people with mental health and substance abuse issues.

In 2003, the state moved away from a consolidated area program model in which large regional agencies were responsible for providing services and paying out Medicaid claims.

The reform effort was designed to eliminate the potential for abuse of the Medicaid billing system by ensuring that the same companies –– in the case of the seven western counties the regional entity was the Smoky Mountain Center –– did not both pay out claims and provide services.

The reform effort resulted in a privatized model where multiple service providers answered to a singe local management entity (LME) for paying claims.

The Smoky Mountain Center became the LME for the seven westernmost counties in the state and many of the center’s staff left to start their own companies to provide services.

With the implementation of CABHA, the private provider network will re-consolidate.