How Managed Care Organizations Will Be the Downfall of Mental Health in NC

Lately, mental health has been a topic of great interest to many people.  Tragedies like the Navy Yard shooting bring the mental health issue even more to the forefront.  Remember, the shooter had complained about auditory hallucinations prior to the horrible event.

Yet North Carolina, like many other states, has implemented the managed care system for Medicaid behavioral health.  These managed care organizations (MCOs) will be the downfall of the mental health care system.

That’s a pretty strong statement, huh? How could these MCOs be the downfall of mental health?

Let me explain…

Currently, in NC we have hundreds of thousands of mental health care providers across the state.  Most of the behavioral health care providers are not huge companies.  Many thousands of these providers are small businesses with under 10 staff, although there are certainly some that staff numerous psychiatrists and hundreds of employees.  Regardless, in the aggregate, these behavioral health care provider staff millions of North Carolinians.  (I don’t have the data on the numbers, so these numbers are estimates).

Not only do we rely on these behavioral health care providers to staff millions of North Carolinians, but these providers also service our 1.5 million Medicaid recipients with any mental health care issue.

I doubt I would receive any opposition to the statement that these behavioral health care providers across NC are assets to our community.  They provide employment for some and mental health services for others.  Without our behavioral health care providers, our Medicaid recipients would (a) not receive medically necessary treatment; and (b) most likely, be hospitalized, incarcerated, or simply non-productive citizens. Not to mention the number of people who would become unemployed if the behavioral health care providers went our of business.

Many studies have proven that, in fact, many mentally ill not receiving care end up in prisons or the emergency room (ER).  For example,  in one study, “More Mentally Ill Persons Are in Jails and Prisons Than Hospitals: A Survey of the States,” the authors found that:

Using 2004–2005 data not previously published, we found that in the United States there are now more than three times more seriously mentally ill persons in jails and prisons than in hospitals. Looked at by individual states, in North Dakota there are approximately an equal number of mentally ill persons in jails and prisons compared to hospitals. By contrast, Arizona and Nevada have almost ten times more mentally ill persons in jails and prisons than in hospitals. It is thus fact, not hyperbole, that America’s jails and prisons have become our new mental hospitals.

The way to combat the fact that many mentally ill become hospitalized or jailed is to have enough behavioral health care providers to service all the people in-need and to allow people easy access to the providers at all times.  It only makes sense. If we have people needing mental health care services, we need enough providers to service them.  This is Logic 101, people.

Well, when we switched over the managed care system for behavioral health, at first, we didn’t see a huge impact.  Yes, we missed ValueOptions.  Yes, we hated the process of provider credentialing and obtaining additional contracts with the new MCOs (I mean, good gracious, we already had the contract with the Department of Health and Human Services (DHHS).  How many contracts would we need?)  But, at first, the MCOs were not crippling.  Killing a ton of trees? Yes.  But crippling? No.

Our government leaders performed two (2) fatal flaws when implementing the MCOs.  (1) The MCOs were allowed to conduct a closed network after a short period of time; and (2) the MCOs were not statewide.  Well, there were probably many more flaws, but these were the most fatal.


The MCOs are allowed via statute to contract with the number of providers that it deems necessary for its catchment area.  If, for example, MeckLINK, the MCO in Meckeleburg county, decides that 1 provider can service all the mental health needs of Medicaid recipients in Mecklenburg county, then MeckLINK may contract with only one provider.

What happens to the rest of the behavioral health providers in Mecklenburg county?  Well, those providers do not have contracts with MeckLINK to provide services within Mecklenburg county.  Never mind that the provider had signed a 5-year lease in downtown Charlotte.  No other provider except for the one that MeckLINK contracts with can provide services in Mecklenburg county.

So you say, so what? The providers can provide services in 99 other counties.

But, what if a provider has been in business for 15 years.  What if the mentally ill that the provider services are severely mentally ill?  What if that provider was the only person that some Medicaid recipients trusted?  What if those Medicaid recipients refuse to switch providers?  Who suffers?  Because, despite any other contention, behavioral health care providers are not fungible.

Or…change it from MeckLINK to Smokey Mountain Center (SMC), which starting next month will have a 23 county catchment area.  23 counties!!

What happens when SMC determines that it will only contract with 2 providers per county?

Are the thousands of behavioral health care providers who reside and service those 23 counties that can no longer provider services all to move out of SMC’s catchment area in order to continue their careers?

No, realistically, if SMC decides that it will only contract with 2 providers per county, all other providers within SMC’s catchment area go out of business.  All employees of those thousands of providers are  unemployed.  Unemployment sky-rockets and the need for Medicaid and food stamps sky-rocket.


The MCOs in NC are not statewide.  What does that mean?  That means that every MCO in NC has its own catchment area…or jurisdiction.  If you are a provider in Wake county, you must have a contract with Alliance Behavioral Health (Alliance).  If you are a provider in Pitt county, you must have a contract with East Carolina Behavioral Health (ECBH).

Other states have implemented MCOs differently.  Such as New Mexico…not that the MCOs are working great in NM, but I do agree with this one facet of NM MCOs.  Other states have MCOs that are statewide.  Each MCO has providers across the state, and…get this…the Medicaid recipients get to choose with which MCO they want to deal.

Think about it…Medicaid recipients having a choice among MCOs depending on the providers with which the MCO contracts.

But not in NC.

In NC, Medicaid recipient Alice may choose to go to Dr. Jane in Charlotte.  In fact, Alice has gone to Dr. Jane for years.  Alice suffers schizophrenia with visual hallucinations.  Dr. Jane has known Alice for so long that Dr. Jane can tell when Alice is going through a more troubling than normal bout.  But last week MeckLINK determined that it would not contract with Dr. Jane and demanded that Dr. Jane transition all clients.

So, Dr. Jane transitions Alice to Dr. Kelly and closes up her shop.  Dr. Jane and her 16 employees file for unemployment, food stamps and subsidized housing…oh, and Medicaid.

Alice decides she hates Dr. Kelly and is convinced that Dr. Kelly had devised a plot to rid her of Dr. Jane.  Remember, people who suffer from mental illnesses don’t always think rationally…

So Alice never goes to any appointments with Dr. Kelly.  Instead, she begins to use heroin again.

Sound far off? Crazy? Unrealistic?

I beg to differ.

The way in which the MCOs are set-up in NC allows the MCOs to unilaterally decide to contract with one provider, but not the other.  Or even scarier, just 1 provider.  The MCO set-up in NC allows the MCOs to determine that certain providers cannot service the population within its catchment area.


If our MCOs continue to terminate Medicaid provider contracts at the rate that they are currently, thousands and thousands of providers will soon be out of business.  Hundreds of thousands of citizens will be unemployed (the staff of the provider companies).  Unemployment will increase.  The need for Medicaid and food stamps will increase.  The very few behavioral health care providers that are still allowed to provide services to Medicaid recipients will be overwhelmed, unable to meet the needs of every single recipient.  Medicaid recipients will not receive individual, unique mental health care; Medicaid recipients will be overlooked (whether they don’t go to appointments, become hospitalized or incarcerated).

And something very tragic will happen here in NC.  And not on a Navy Yard.

Hence the downfall of mental health in NC.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on September 22, 2013, in Behavioral health, ECBH, Health Care Providers and Services, MCO, MeckLINK, Medicaid, Medicaid Recipients, Medicaid Services, Mental Health, Mental Health Problems, Mental Illness, NC DHHS, New Mexico, North Carolina, Provider Medicaid Contracts, Psychiatrists, Psychologists, Smokey Mountain Center, Termination of Medicaid Contract and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink. 13 Comments.

  1. Thank you for your blog. I have nearly cut out my entire medicaid case load because of the constant fear of a pay back, an audit, or what not from Partner’s MCO. I’ll see a few of my clients pro bono just because I have no desire to have the MCO in my life. I had my first audit back in June, and vowed to myself that I would not have another. I passed the audit with flying colors, but it was not worth the emotional stress. They threw me for a loop because the majority of my clients that they wanted to audit had both medicaid and medicare. I didn’t think that they had authority over medicare. I follow McCrory’s Partnership for Healthy NC, but I am still not so sure if that is the answer either. Anything is better than those MCO’s.

  2. Justin,

    Thanks for sharing. Sadly, I think many providers are doing the same thing that you did (cutting Medicaid clients).

  3. Reblogged this on medicaidlaw-nc and commented:

    And see @NCCapitol’s blog:

  4. There’s a reason why it’s a state agency. The contracting should be done on a state level. The MCOs can still administer their own local jurisdictions, but the determination as to whether or not to contract cannot be left to them.

    Also, I thought only the state could decide to terminate a contract, and isn’t that a de facto termination of the contract if the local administrator declines to contract with the provider?

  5. So the state of NC would rather have sub-par Medicaid providers treating our most sick patients? A closed network means quality…..If it were me or my family member I would rather they go with an overly contracted, qualified provider who has a successful treatment record then “Johnny come fix me” who just bills Medicaid because he can….Wouldn’t you?

    • That’s a new one. How does a closed network mean quality? You completely lost me there. I respectfully disagree with you that a closed network means quality. That is similar to saying: Monopolies are good because you know that the monopoly gives a good product. Are you anti-capitalism too?

      On the contrary, a closed network allows the MCOs to pick and choose which providers to enroll based on anything. The MCO may only enroll providers run by people who only voted Republican..or non-minorities…or people with southern accents. There is no requirement for the MCOs to enroll with the best providers or providers with the most qualifications. So who is to say that a provider enrolled with an MCO provides quality care?? Or a provider not enrolled with an MCO provides sub-par care?

      If it were my family member seeking treatment, I would (a) want my family member to be able to CHOOSE which provider to go to; and (b) have hundreds of providers to choose from of the first one does not work out.

      • Why does a closed network NOT mean quality? In traditional managed care a health insurance company usually determines who it contracts with based on how aggressive a provider’s discount is and how available the provider’s services are to the company’s customers. However, most plans consider other credentials for inclusion in the network, including the provider’s educational background, board certification and outcomes….you can google this or find it in any Managed Care 101 textbook.

        Practicing a bit of “personal anti-capitalism” would probably result in less mental illness….it’s kinda stressful to make money for everyone but yourself…O wait- that might not apply to you….Hmmmm….I do respect your desire to become one of the elite…especially on the backs of the poor Medicaid provider who is just trying to serve its community….LOL!

        How do you KNOW an MCO picks and enrolls providers based on their favorite color? You are assuming because there is not a mandate dictating how an MCO should create their network that they must not give a shit what kind of provider represents them….come on now- have a little faith in the people who are trying to ensure quality care is being delivered to the poorest people.

        Maybe just maybe if we actually look at and hold our Medicaid providers accountable we might see less people in jail, less people in hospitals, less people living on the street…..the sheer amount of Medicaid providers in one community does not mean they do a good job…it means they have a job. Remember Community Support…..WOW!!!!! A lack of monitoring made providers RICH with little positive result to the patient and a total waste of my hard earned money!

        Ahhhhh America – ain’t it great? O and by the way your family member can choose who EVER they want- they just might have to pay outta pocket…OMG!

  6. Jim, You are obviously not a health care provider. These providers don’t get rich serving Medicaid recipients. They provide services to Medicaid recipients because they care. Your view, albeit everyone is entitled to his or her opinion, is so far from reality. But thank you for your comments.

  7. Is there a blog where medicaid clients have voiced there opinions on the denial of medically necessary treatment. My daughter was denied therapeutic residential treatment after being approved for the same treatment for the previous two months. I appealed the decision on Oct 1st 2013 and they denied the appeal on the 3rd. I have to pick her up tomorrow. Her therapist,doctor and QP all sent in letters with my appeal stating she needed to stay where she is. Today I found out that they are not approving her for her school either. Are others going through these same issues? I have been searching for this help for her for years. She is finally getting the help she needs and there taking it away because there doc says its not necessary. Any ideas would be appreciated.

    • Rebecca,

      I am so sorry you are going through this. I do not know of another blog just for Medicaid recipients, but, please, feel free to use this one. I hope that you appeal. Your daughter will receive maintenance of service (if you are appealing a reduction or termination).

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