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Mental health cuts stir controversy

But the DHS says changes won't reduce access to care.

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BRACING FOR CUTS: Mental health advocate and former U.S. Rep. Patrick Kennedy addresses a crowd at the state Capitol on Sept. 27. - BENJAMIN HARDY
  • Benjamin Hardy
  • BRACING FOR CUTS: Mental health advocate and former U.S. Rep. Patrick Kennedy addresses a crowd at the state Capitol on Sept. 27.

A group of behavioral health providers and patients rallied at the Arkansas Capitol last Thursday to protest reductions in Medicaid reimbursement rates that they say threaten to drive mental health agencies out of business.

Rate changes implemented by the state Department of Human Services on July 1 have resulted in an 11 percent across-the-board cut for some providers, according to Luke Kramer, the director of the STARR Coalition, the advocacy group that organized the protest. The state, he said, appears to be "systematically dismantling" the behavioral health system, endangering thousands of Arkansans suffering from mental illnesses.

"I don't know what the endgame is for the state," Kramer said after the event. "Is it to go to complete managed care? Is it to save money so you can have a press conference saying, 'We've added no one to the Medicaid rolls, and we've saved the state X amount of dollars,' and then turn those dollars back into tax cuts for other Arkansans?"

Governor Hutchinson has set a goal of achieving $835 million in savings in the state Medicaid budget over a five-year period. At an August press event, he celebrated the fact that the state's total spending on the government-funded insurance program remained flat from fiscal year 2017 to 2018. The reduced spending has resulted partly from a variety of "transformation" efforts and partly from a reduction in Medicaid enrollment by over 60,000 beneficiaries. (The rolls will likely shrink by thousands more in the coming months as the DHS phases in the governor's new work requirement for certain adult, nondisabled Medicaid beneficiaries.) Hutchinson and GOP lawmakers intend to pass a new round of state tax cuts in the 2019 legislative session.

Yet calls for reform in behavioral health are not limited to budget hawks. Later this month, the largest behavioral health agency in the state, Preferred Family Healthcare, will withdraw from Arkansas and sell its 45 sites to another provider. Former PFH executives are at the center of multiple federal criminal investigations into alleged bribery schemes that implicate several Arkansas legislators of both parties, four of whom have pleaded guilty. State investigators have separately accused former PFH employees of schemes to siphon millions of dollars from Medicaid through fraudulent billing practices. (PFH, which was formerly called Alternative Opportunities, does business in Arkansas under the names Dayspring, Decision Point and Health Resources of Arkansas; it is based in Springfield, Mo.) According to federal investigators, leaders at PFH embezzled millions of dollars from the nonprofit, which was funded largely by public money.

But while PFH's former leaders may have engineered a way to unduly profit from the system, other behavioral health providers have been barely scraping by, according to Kramer and other advocates. "Most people are just breaking even ... but that was before [the] July [rate changes]," he said. "We're talking about people who are just bleeding money out and having to take out loans."

Still, the PFH scandal raises difficult questions. Are some Medicaid spending categories in the mental health system being exploited by unscrupulous providers? How can the state prevent such abuses from occurring in the future while also funding quality care for the politically vulnerable population of mentally ill Arkansans?

Former U.S. Rep. Patrick Kennedy (D-Rhode Island), a national mental health advocate who headlined last week's rally, said it's all too easy for states to cut mental health services. "Just be honest. It's easy to cut these people, because they don't rank too high in the list of constituent power groups."

DHS spokeswoman Amy Webb disputed the notion that behavioral health reform efforts will reduce access for beneficiaries. The agency is implementing a long-term plan to overhaul the behavioral health system — an effort that predates the scandal at PFH. While rates paid to large behavioral health agencies were reduced on July 1, Webb wrote in an email, rates for individually licensed providers rose by a significant amount. ILPs, such as self-employed psychologists or licensed clinical social workers, can now provide Medicaid-funded services without being a part of a behavioral health agency, she said.

Reimbursement rates for the two types of providers have been equalized. Previously, ILPs were paid $39.28 an hour for individual counseling, while behavioral health agencies were paid $109.20 an hour. Now, both types of providers are reimbursed at $92.76 an hour.

"That has expanded the number of people who can provide behavioral health services," Webb wrote. A fact sheet provided by the DHS said the number of ILPs in the state rose from 31 to 106 from July 2017 to September 2018. Another 61 are in the process of being enrolled.

"The old Medicaid behavioral health system required people to get assistance through a single provider type — the big behavioral health agencies — and there was a moratorium in place for new providers," Webb wrote. "It was a one-size-fits-all system ... without independent checks, meaning that the same providers getting paid to provide services also decided what types of services people needed and for how long. The new system has expanded services, allowed for more providers to step up and offer care to beneficiaries, and now requires an independent assessment rather than having providers deciding what people need."

Webb also said the new system "provides all Medicaid beneficiaries access to substance abuse treatment for the first time."

Ro Garcia, the chief operating officer of Little Rock behavioral health agency Inspiration Day Treatment, said those arguments don't hold up to scrutiny. ILPs in private practice are serving a much different population of clients, according to Garcia. "They're seeing people who come in once or twice a month. We're seeing our folks five or six times a week," he said. "We're talking about the clients that are so ill that they need to come to a day treatment center most days out of the week to stay out of the hospital."

Carol Witham, Inspiration's CEO and founder, said her clients can't afford disruptions in medication and services.. "Substance abuse does not substitute for treatment for the seriously mentally ill." (Witham is also the chairwoman of the STARR Coalition's board.) An independently wealthy philanthropist, Witham said she's now forced to put her own money into Inspiration to keep the behavioral health agency afloat. Other providers don't have that luxury, she said, and are facing the very real possibility of imminent closure.

Witham said she was skeptical that new providers would step up to treat severely mentally ill clients such as hers. "There is no company that's going to come in new and take on what we do for these rates ... you'll lose money," she said. If her clients go without care, she said, the public will bear the cost.

"For this population, you have no choice — the state has to take care of them. You can give them mental health treatment, and keep them on their meds ... or, second, they will be in the criminal justice system ... and your family or my family could be the victim of a crime," Witham said. "And it's a lot costlier for them to go into the prison system than for them to go into treatment." Witham estimated that perhaps 80 percent of her clients "could become violent without taking their medication."

Patricia Gann, one of the DHS officials overseeing behavioral health reform efforts, said in an interview that the DHS was working with providers to help them transition to the new system. Under the old system, she said, severely mentally ill adults had just two options: acute inpatient treatment at a hospital or outpatient therapy at a behavioral health agency. Often, there would be a weeks-long waiting list for outpatient therapy, creating a gap in services.

The new system, she said, allows providers to get Medicaid reimbursement for other levels of care between hospitalization and outpatient therapy, including "therapeutic communities" and "partial hospitalization."

"We've added that higher level of care," she said. "Now we have to work with providers in developing those services in the community."

Some of the recent alarm among providers, Gann said, was the result of claims being rejected due to internal issues with billing. Those rejections were in error, and the DHS has recently corrected the issues, she said.

Gann said the projected behavioral health budget for the 2019 fiscal year does not contain a funding reduction relative to 2017 or 2018. "We added new services and we have the same spend," she said.

This reporting is made possible in part by a yearlong fellowship sponsored by the Association of Health Care Journalists and supported by The Commonwealth Fund. It is published here courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.

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