State 'rebased' Medicaid funding for mental health agencies in 2014
By Amy Biolchini
The Holland Sentinel
HOLLAND, Mich. (AP) - J.R. Robinson rubbed his hands together. A hollow sadness sits behind his eyes, punctuating a broken expression.
"I'm struggling every day," said the 51-year-old Holland resident; a Tennessee accent filling soft, steady words.
"Bipolar depression doesn't go away like a virus. There's only so much medications can do."
His appearance at the Holland Drop-In-Center on Sept. 29, was no easy feat.
Without scheduled classes two days a week at Community Mental Health of Ottawa County, motivating himself to leave his apartment is a battle.
"It kept me from isolating; it kept me from drinking," Robinson said. "We felt like we were somebody."
It's been six months since CMH dropped Robinson from services.
He's not alone. About 50 CMH clients in Ottawa County no longer receive treatment after the agency went through a round of budget reductions this spring.
Swift budget cuts made this year by the county meant reductions in services for clients with mental health and developmental disabilities, and staff layoffs.
Local officials have pointed to changes in their Medicaid funding, but regionally, there's more in play.
As with any valuable social service, funding for CMH agencies isn't simple. In Ottawa County, 92 percent of the $38 million CMH budget comes from Medicaid, state general fund is 3 percent to 4 percent and $476,000 is from the county.
Ottawa CMH was hit with a 62 percent reduction in its funding from the state's general fund - a drop from $3.5 million in fiscal 2014 to $1.4 million in fiscal 2015.
Medicaid funding is funneled through a new regional entity - Lakeshore Regional Partners - that was launched in 2014 to help county-level agencies reduce administrative costs and create more equitable services across counties.
Ottawa used to be paired with Muskegon - but now the two counties are working with Allegan, Kent, Lake, Mason, and Oceana counties. It's a part of a larger state-wide re-grouping of CMH agencies. In 2014, the state "rebased" Medicaid funding for mental health agencies: a $10 million cut to the Lakeshore region.
Ottawa County has experienced bigger budget issues than most because of one reason: it's been overfunded.
Muskegon had been giving about $2 million of its unused Medicaid funding to Ottawa CMH for the past 16 years, which it was able to do because of its conservative budget.
When the new region formed, the five CMHs agreed to stick with their historic funding methodologies - and so Ottawa continued to receive additional funds.
That's now changing.
The regional board has voted to move to the state's standard per-person, per-month formula for determining Medicaid allocations - which means a $6.8 million cut to Ottawa County. The county has four years to absorb the decreased revenue in its budget.
CMH has reduced its staff by 35 people this year, starting with reductions first at the administrative level and then at the clinical and direct care levels, Executive Director Lynne Doyle said.
"We are always trying to push as many dollars as we can to customer care and consumer services," Doyle said.
In the middle of its fiscal year CMH realized it was overspending in its general fund. The agency foots the bill for clients who are on a Medicaid "spend-down" out of that fund - and decided to re-evaluate their need for services.
"We determined there were 50 folks who were at a stage in their recovery and treatment that were good candidates to link to community services," Doyle said.
About 2,600 people use the agency annually. Despite the cuts, the agency still ended its 2015 fiscal year Sept. 30 with a $400,000 deficit in its general fund.
The budget issues have trickled down to nonprofits like the Holland Drop-In Center, whose budget has been cut by 20 percent this year by CMH and is dropping its cable TV this month to save cash. Still, CMH refers clients it has determined no longer have a medical need for services to the Drop-In Center.
It's also affected major CMH contractors like Kandu, which ceased operations Sept. 30. Kandu may have its own financial issues, as the Ottawa County Sheriff's Office launched an investigation two weeks ago.
"We have folks that need to be served," said Rita Bird, Lakeshore Regional Partners board member. "Just because the agency has targeted certain places to cut to make this budget balanced, doesn't mean the folks that are gone are being served with the correct scope, frequency and duration."
The creation of the regional entity - Lakeshore Regional Partners - was intended to shift administrative functions off the backs of county agencies to free up money in their budgets for their work. Instead, about 20 people were hired to staff the regional office - totaling administrative costs of about $4 million - and their work is still duplicated in each of the five counties they serve, Bird said.
There's been a reluctance by some counties to give up control of some administrative functions.
The management of that transition has come under the scrutiny of state officials, who say the region hasn't consolidated administrative functions quickly enough.
As a result, Tom Renwick, director of the bureau of community based services for the state's Behavioral Health and Developmental Disabilities Administration is now attending all meetings of the regional board to provide oversight - and the region is being audited by Beacon Health.
Renwick explicitly instructed LRP Executive Director Rich VandenHeuvel that administrative functions like customer services, quality oversight, training and information technology services be consolidated first before initiating funding reductions to service providers that would impact clients.
Leadership throughout the transition has been called into question.
When the five CMHs entered into the new region, each had their own funding methodologies and formulas. They agreed to divide the region's Medicaid dollars according to historical spending levels at first - which meant Ottawa continued to receive a higher level of funding per person than in other counties.
"There was no transparency amongst all the CFOs about the extent to which people were getting a lot of extra funding," said Marianne Huff, executive director of Allegan County Community Mental Health.
Allegan's agency hired a lawyer and called the distribution into question because they were losing Medicaid funding in the new regional arrangement.
"No one sat down and provided leadership and said, 'You guys (like Ottawa County) might want to start working on this now," Huff said. "It became more of a crisis when we realized what kind of a deficit we were going to have as a region. . Had we put a plan in place sooner, it would have been so much better because we could have been working on it conjointly."
In mid-July Renwick informed VandenHeuvel that the level of reserves that the region was projected to end with - less than half of a percent of revenue - raised a major red flag.
"These projections call the PIHP's ability to perform their contractual obligations without entering the state's risk-sharing corridor into question," Renwick wrote.
The board, which was split in its support of VandenHeuvel, was left in the dark about the state of the region's finances during the first years of its formation, Bird said.
In addition, regional officials forgot to budget for a hospital use tax, Bird said.
"What that meant was, the regional board was being told that we had more money to spend than we actually did," Bird said. "It was millions of dollars. The end result is, we had to tell every executive director of the five CMHs that make up the region to make cuts and present a new 14-15 budget for that year."
The Lakeshore board did not offer VandenHeuvel a new contract - and so the CEO departed upon his contract's expiration in July.
"We're considered a failed region and have to do some things to improve our last couple of year's performance," Bird said. "The audit will either show that we're improving and addressing the problems, or it will show us there's not much likelihood we'll ever get any better. In which case, the state has already told us, if we can't perform as a region, they'll bid out the services to someone else."
Much of the chaos in the region's budget came from the introduction of the Healthy Michigan plan - a product of Medicaid expansion under the Patient Protection and Affordable Care Act of 2010 that is good for patients but not so for agencies' budgets.
CMH agencies previously received payments for each person in the county that received a type of Medicaid called TANF - Temporary Aid to Needy Families.
The number of people on TANF in the region dropped from 140,000 in July of 2014 to 113,00 in January 2015, Huff said, as consumers moved from TANF onto the Healthy Michigan plan. The result: fewer dollars to the region's mental health agencies that haven't been replaced.
The state initially told the region that it would be able to use any excess money from an influx of new funding for the Healthy Michigan plan to offset any Medicaid overspending - and so it was built into the budget. Three months into the fiscal year in December, the state reversed its position, Doyle said.
The regional board approved the hire of Jeff Brown as interim director this summer. Brown, a consultant, was previously the executive director of Oakland County Community Mental Health. The Oakland board did not renew Brown's contract after his nine-year tenure at the helm of the agency.
Brown said the challenge of creating a new region was exacerbated by changes taking place statewide and with the finances of the Healthy Michigan plan.
"There's an awful lot of change at once, but you need a strong regional entity to be able to work with the local service delivery organizations," Brown said.
Though an interim director, Brown said he's committed to "right-sizing" administrative functions across the region throughout the next three months while maintaining provider rates and service delivery.
A priority for Brown is to bring customer service functions and Medicaid fair hearings back to the regional level away from the county agencies.
"Bringing areas and functions that are consumer protections to the regional level, so that we get the uninterrupted version of issues people are having with service delivery," Brown said.
The LRP is seeking a permanent director, and Brown is applying for position.
Though the budget situation may be complex, the impacts are severely personal.
Jeffrey Ford, 64, of Holland, is bipolar depressed and has anxiety. He's also been treated for borderline personality disorder.
CMH stopped his services in April, also due to budget cuts.
"If a crisis came up, I could call them," Ford said, explaining he saw a therapist and took classes twice a week.
He felt like he belonged to something. Now, Ford says he's lost.
"I've had multiple relapses because of this," Ford said, noting he had a friend take their own life after being dropped from services.
For Robinson, it's meant he's lost a therapist he grew to trust; he's lost programs that taught him how to cope with his anger and emotions; he's lost a connection to an agency that helped him to finally put a word to the illness he'd carried since the age of 15 that drove him to drink and abuse drugs.
He's taking more pills now than he was six months ago, as he again tries to fill a hole in his life.
But they aren't they kind of emotional medication Robinson said he received from CMH.
"It was like we weren't valued people," Robinson said, describing his feelings when he was dropped from services. "It was like taking out the trash."
Published: Tue, Oct 13, 2015
