RALEIGH, N.C. (AP) — North Carolina lawmakers sounded apprehensive Tuesday over how a regional mental health agency found itself with a multimillion-dollar shortfall within months of taking on expanded Medicaid responsibilities that are set to be imitated statewide by 2013.
The Western Highlands Network, which manages services for the mentally ill, substance abusers and the developmentally disabled in Buncombe and seven other western counties, converted to a new administrative format last January.
By June 30, the network was nearly $4.6 million behind, according to a document provided by the state Department of Health and Human Services to legislators. The network is expected to receive about $140 million this year for services and administration.
The network's chief executive officer was fired last month, but legislators on an oversight committee remain concerned after an outside consultant determined issues identified late last year before the network's conversion were still unresolved last month. Legislators are worried because other regional entities are aiming to convert from fee-for-service administrators of mental health and other services to managed-care organizations by this coming January.
"This must work and we must provide for those that can least provide for themselves," said Sen. Tommy Tucker, R-Union. "We can't afford this. We can't afford these problems to reverberate throughout the system."
The Legislature agreed in 2011 on this conversion as a second-chance solution to mental health care reform that fell well short of expectations. The reform began in 2001 as 39 local public programs providing clinical treatment were converted into about half as many administrative hubs designed to help patients find community treatment.
Today, those hubs are being consolidated into 11 managed-care organizations that will receive a fixed amount of money for each Medicaid-eligible consumer to provide services.
One of the 11 — Piedmont Behavioral Health — began as a managed-care pilot program in five counties in 2005 and is now labeled by reform supporters as the model.
State health department officials said they agreed to let Western Highlands convert in January 2012 as long as the network followed an action plan to address shortcomings from the consultant's initial report. But the action plan wasn't completed.
Charles Schoenheit, the network's interim CEO, said the review by the Mercer consulting firm late last year wasn't ignored. The network has extra funds in reserve to make up the shortfall for now.
"Our information systems department has been underfunded and I believe is the source of many of those problems," Schoenheit told the oversight committee. "Our corrections have not been implemented as quickly as we would have liked."
State Medicaid office director Mike Watson — formerly the department's chief deputy — said in hindsight he wouldn't have signed off on the Western Highlands conversion given what he knows now.
Watson and Department acting Secretary Al Delia pointed said the agency is learning from the mistakes as seven other agencies prepare to come online in the coming months. Two managed-care organizations that began after Western Highlands — East Carolina Behavioral Health in April and Smoky Mountain Center in July — are doing well so far, department officials said.
Another regional conversion has been delayed to address claims administration processing problems. Delia told the committee the agency is still on track to complete the conversion statewide by January, although the 2011 law provides six more months if needed.
Senate Minority Leader Martin Nesbitt, D-Buncombe, said Western Highlands officials shouldn't be singled out for the shortfall because they received $15 million less to provide mental health and other services compared to what the state previous spent before the conversion. So they are still saving the state money even with the shortfall, he said.
"It's incredible to me that we're down here skewering them," he said.
Rep. Nelson Dollar, R-Wake, co-chairman of the oversight committee, said other managed-care conversions appear to be succeeding because they are following more closely the Piedmont Behavioral Health model.
In contrast, Dollar said, the problems at Western Highlands appear to be a "complete failure" of its management.