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Darkness Surrounds MCO Mergers: Are Closed Meetings for MCOs Legal?

Recently, Eastpointe Human Services’ board voted unanimously to consolidate with Cardinal Innovations Healthcare, which would make the merged entity the managed care organization (MCO) overseeing 1/3 of NC’s Medicaid, behavioral health services – 32 counties, in all.

The Board’s decision is subject to the approval of the Secretary, but Eastpointe hopes to consolidate by July 1st.

Whether a consolidation between Eastpointe and Cardinal is good for Medicaid recipients and/or our community, I have no opinion.

But the reason that I have no opinion is because the negotiations, which all deal with public funds, have occurred behind closed doors.

Generally, it is our public policy that public bodies’ actions are to be conducted openly. This is why you can stroll on over to our courthouse and watch, virtually, any case be conducted.  There are rare cases in which the court will “seal” or close the record, such as to protect privileged health information or the identity of children.  Our public policy that strongly encourages open sessions for public entities exists for good reason.  As tax payers, we expect full disclosure and transparency as to how our tax dollars are being used.  In a way, all tax paying NC residents are shareholders of NC.  Those who spend our tax dollars owe us a fiduciary duty to manage our tax dollars in a reasonable and responsible manner, and we should be able to attend all board meetings and review all meeting minutes. The MCOs are the agents of the single state entity, Department of Health and Human Services (DHHS), charged with managing behavioral health care for the Medicaid and state-funded population suffering with mental health/developmentally disabled /substance abuse (MR/DD/SA) issues.  As an agent of the state, MCOs are public entities.

But, as I am researching the internet in search of Eastpointe and Cardinal board meeting minutes, I realize that the MCOs are initiating closed meetings and quoting N.C. Gen. Stat. § 143-318.11, ” Closed sessions” as the  basis for being able to conduct closed sessions.  And the number of closed sessions that I notice is not a small number.

The deliberations of a merger between two MCOs are highly important to the public. The public needs to know whether the board members are concerned about improving quality and quantity of care. Whether the deliberations surround a more inclusive provider network and providing more services to those in need. Whether the deliberations consider using public funds to create playgrounds or to fund more services for the developmentally disabled. Or are the board members more concerned with which executives will remain employed and what salaried are to be compensated?

You’ve heard of the saying, “Give him an inch and he’ll take a mile?”  This is what is going through my mind as I review the statute allowing public bodies to hold closed sessions.  Is the statute too open-ended? Is the closed session statute a legal mishandling that unintentionally, and against public policy, allows public meetings to act privately? Or are the MCOs misusing the closed session statute?

So I ask myself the following:

1. Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions? and, if the answer to #1 is yes, then

2. Are the MCOs overusing or misusing its ability to hold closed sessions? If the answer to #3 is yes, then

3. What can be done?

These are the three questions I will address in this blog.

Number one:

Is N.C. Gen. Stat. § 143-318.11 applicable to MCOs, or, in other words, can the MCOs conduct closed sessions?

According to the statute, “”public body” means any elected or appointed authority, board, commission, committee, council, or other body of the State, or of one or more counties, cities, school administrative units, constituent institutions of The University of North Carolina, or other political subdivisions or public corporations in the State that (i) is composed of two or more members and (ii) exercises or is authorized to exercise a legislative, policy-making, quasi-judicial, administrative, or advisory function.”

The MCOs are bodies or agents of the state that are composed of more than 2 members and exercises or is authorized to exercise administrative or advisory functions to the extent allowed by the Waivers.

I determine that, in my opinion, N.C. Gen. Stat. § 143-318.11 is applicable to the MCOs, so I move on to my next question…

Number two:

 Are the MCOs overusing or misusing its ability to hold closed sessions?

As public policy dictates that public bodies act openly, there are enumerated, statutory reasons that a public body may hold a closed session.

A public body may hold a closed session only when a closed session is required:

  1. “To prevent the disclosure of information that is privileged or confidential pursuant to the law of this State or of the United States, or not considered a public record within the meaning of Chapter 132 of the General Statutes.
  2. To prevent the premature disclosure of an honorary degree, scholarship, prize, or similar award.
  3. To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure. If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.
  4. To discuss matters relating to the location or expansion of industries or other businesses in the area served by the public body, including agreement on a tentative list of economic development incentives that may be offered by the public body in negotiations, or to discuss matters relating to military installation closure or realignment. Any action approving the signing of an economic development contract or commitment, or the action authorizing the payment of economic development expenditures, shall be taken in an open session.
  5. To establish, or to instruct the public body’s staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating (i) the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease; or (ii) the amount of compensation and other material terms of an employment contract or proposed employment contract.
  6. To consider the qualifications, competence, performance, character, fitness, conditions of appointment, or conditions of initial employment of an individual public officer or employee or prospective public officer or employee; or to hear or investigate a complaint, charge, or grievance by or against an individual public officer or employee. General personnel policy issues may not be considered in a closed session. A public body may not consider the qualifications, competence, performance, character, fitness, appointment, or removal of a member of the public body or another body and may not consider or fill a vacancy among its own membership except in an open meeting. Final action making an appointment or discharge or removal by a public body having final authority for the appointment or discharge or removal shall be taken in an open meeting.
  7. To plan, conduct, or hear reports concerning investigations of alleged criminal misconduct.
  8. To formulate plans by a local board of education relating to emergency response to incidents of school violence or to formulate and adopt the school safety components of school improvement plans by a local board of education or a school improvement team.
  9. To discuss and take action regarding plans to protect public safety as it relates to existing or potential terrorist activity and to receive briefings by staff members, legal counsel, or law enforcement or emergency service officials concerning actions taken or to be taken to respond to such activity.”

Option 1 clearly applies, in part, to privileged health information (PHI) and such.  So I would not expect that little Jimmy’s Medicaid ID would be part of the board meeting issues, and, thus, not included in the minutes, unless his Medicaid ID was discussed in a closed session.

I cannot fathom that Option 2 would ever be applicable, but who knows?  Maybe Alliance will start giving out prizes…

I would assume that Option 3 is used most frequently.  But notice:

“General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant.”

Which means that: (1) the closed session may only be used to talk about specific legal strategies and not general policies.  For example, arguably, an MCO could hold a closed session to consult with its attorney whether to appeal a specific case, but not to discuss whether, generally, the MCO intends to appeal all unsuccessful cases.

and

(2) the MCO cannot call for a closed session “on the fly” and only because its attorney happens to be participating in the board meeting.

As I am rifling through random board meeting minutes, I notice the MCO’s attorney is always present.  Now, I say “always,” but did not review all MCO meeting minutes. There may very well be board meetings at which  the attorneys don’t attend. However, the attorney is present for the minutes that I reviewed.

Which begs the question…Are the MCOs properly using the closed sessions?

Then I look at Options 4, and 5, and 6, and 7, and 8, and 9…and I realize, Geez, according to one’s interpretation, the statute may or may not allow almost everything behind closed doors. (Well, maybe not 9).  But, seriously, depending on the way in which each Option is interpreted, there is an argument that almost anything can be a closed session.

Want to hold a closed session to discuss why the CEO should receive a salary of $400,000? N.C. Gen. Stat. § 143-318.11(5)(ii).

Want hold a closed session to discuss the anonymous tip claim that provider X is committing Medicaid fraud? N.C. Gen. Stat. § 143-318.11(7).

Want to hold a closed session to discuss how an MCO can position itself to take over the world? N.C. Gen. Stat. § 143-318.11(4).

In an atmosphere in which there is little to no supervision of the actions of the MCOs, who is monitoring whether the MCOs are overusing or misusing closed sessions?

Number three:

What can you do if you think that an MCO is holding closed sessions over and above what is allowed by N.C. Gen. Stat. § 143-318.11?

According to N.C. Gen. Stat. § 143-318.16A, “[a]ny person may institute a suit in the superior court requesting the entry of a judgment declaring that any action of a public body was taken, considered, discussed, or deliberated in violation of this Article. Upon such a finding, the court may declare any such action null and void. Any person may seek such a declaratory judgment, and the plaintiff need not allege or prove special damage different from that suffered by the public at large.”

Plus, according to N.C. Gen. Stat. § 143-318.16A, “[w]hen an action is brought pursuant to G.S. 143-318.16 or G.S. 143-318.16A, the court may make written findings specifying the prevailing party or parties, and may award the prevailing party or parties a reasonable attorney’s fee, to be taxed against the losing party or parties as part of the costs. The court may order that all or any portion of any fee as assessed be paid personally by any individual member or members of the public body found by the court to have knowingly or intentionally committed the violation; provided, that no order against any individual member shall issue in any case where the public body or that individual member seeks the advice of an attorney, and such advice is followed.”

 In sum, if you believe that an MCO is conducting a closed session for a reason not enumerated above, then you can institute a lawsuit and request attorneys’ fees if you are successful in showing that the MCO knowingly or intentionally committed the violation.

We should also appeal to the General Assembly to revise, statutorily, more narrowly drafted closed session exceptions.

Medicaid Closed Networks: Can Waivers Waive Your Legal Rights?

Sorry for the lapse in blogging. I took off for Thanksgiving and then got sick. I hope you all had a wonderful Thanksgiving!!

While I was sick, I thought about all the health care providers that have been put out of business because the managed care organization (MCO) in their area terminated their Medicaid contract or refused to contract with them. I thought about how upset I would be if I could not see my doctor, whom I have seen for years. See blog for “You Do Have Rights!

Then I thought about…Can a Waiver waive a legal right?

Federal law mandates that Medicaid recipients be able to choose their providers of choice. Court have also held that this “freedom of choice” of provider is a right, not a privilege.

42 U.S.C. § 1396a states that Medicaid recipients may obtain medical services from “any institution, agency, community pharmacy, or person, qualified to perform the service or services required… who undertakes to provide him such services….” Id. at (a)(23).

So how can these MCOs restrict access?

First, we need to discuss the difference between a right and a privilege.

For example, driving is a privilege, not a right. You have no right to a driver’s license, which is why you can lose your license for things, such as multiple DUIs. Plus, you cannot receive a driver’s license unless you pass a test, because a license is not a right.

Conversely, you have the right to free speech and the right to vote. Meaning, the government cannot infringe on your rights to speak and vote unless there are extraordinary circumstances. For example, the First Amendment does not protect obscenity, child pornography, true threats, fighting words, incitement to imminent lawless action (yelling “fire” in a crowded theater), criminal solicitation or defamation. Your right to vote will be rescinded if you are convicted of a felony. Furthermore, you do not need to take a test or qualify for the rights of free speech and voting.

Likewise, your choice of health care provider is a right. It can only be usurped in extraordinary circumstances. You do not need to take a test or qualify for the right. (Ok, I am going to stop underlining “right” and “privilege” now. You get the point).

Then how are MCOs operating closed networks? For that matter, how can Blue Cross Blue Shield (BCBS) terminate a provider’s contract? Wouldn’t both those actions limit your right to choose your provider?

The answer is yes.

And the answer is simple for BCBS. As for BCBS, it is a private company and does not have to follow all the intricate regulations for Medicare/caid. 42 U.S.C.  § 1396a is inapplicable to it.

But Medicaid recipients have the right to choose their provider.  This “freedom of choice” provision has been interpreted by both the Supreme Court and the Seventh Circuit as giving Medicaid recipients the right to choose among a range of qualified providers, without government interference (or its agents thereof).

What does this mean? How can a managed care organization (MCO) here in NC maintain a closed network of providers without violating the freedom of choice of provider rule?

The “Stepford” answer is that we have our Waivers in NC, which have waived the freedom of choice. In our 1915 b/c Waiver, there are a couple pages that enumerates certain statutes. We “x” out the statutes that we were requesting to waive.

It looks like this:

waiver1

Furthermore, federal law carves out an exception to freedom to choose right when it comes to managed care. But to what extent? It the federal carve unconstitutional?

But…the question is twofold:

  • Would our Waiver stand up to federal court scrutiny?
  • Can our state government waive your rights? (I couldn’t help it).

Let’s think of this in the context of the freedom of speech. Could NC request from the federal government a waiver of our right to free speech? It sounds ludicrous, doesn’t it? What is the difference between your right to free speech and your right to choose a provider? Is one right more important than the other?

The answer is that no one has legally challenged our Waiver’s waiver of the right to freedom of provider with a federal lawsuit claiming a violation of a constitutionally protected right. It could be successful. If so, in my opinion, two legal theories should be used.

  1. A § 1983 action; and/or
  2. A challenge under 42 CFR 431.55(f)

Section 1983 creates a federal remedy against anyone who deprives “any citizen of the United States… of any rights, privileges, or immunities secured by the Constitution and laws” under the color of state law. 42 U.S.C. § 1983. The Supreme Court has explained that § 1983 should be read to generally “authorize[] suits to enforce individual rights under federal statutes as well as the Constitution.” City of Rancho Palos Verdes, Cal. v. Abrams, 544 U.S. 113, 119 (2005).

Section 1983 does not authorize a federal remedy against state interference with all government entitlements, however; “it is rights, not the broader or vaguer ‘benefits’ or ‘interests,’ that may be enforced under the authority of that section.” Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). But the courts have already held that the freedom to choose your provider is a right.

In 2012, the Seventh Circuit confirmed that § 1983 authorizes Medicaid recipients to sue to enforce the right to freely choose among qualified health providers.

In Planned Parenthood, the court was confronted with an Indiana state law prohibiting state agencies from providing state or federal funds to any entity that performs abortions or maintains or operates a facility in which abortions are performed – regardless of whether there is any nexus between those funds and the abortion services. See Planned Parenthood, 699 F.3d at 967 (7th Cir. 2012). In other words, the law effectively prohibited entities that perform abortions from receiving any state or federal funds for any (non-abortion) purpose.

The Court found that the restrictions violated the Medicaid recipients’ right to freedom of choice of provider.

There are, as always, more than one way to skin a cat. You could also attack the Waiver’s waiver of the freedom to choose your health care provider by saying the NC is violating 42 CFR 431.55.

Notice the last sentence in subsection (d) in the picture above. In our Waiver, NC promises to abide by 42 CFR 431.55(f), which states:

(f) Restriction of freedom of choice—
(1) Waiver of appropriate requirements of section 1902 of the Act may be authorized for States to restrict beneficiaries to obtaining services from (or through) qualified providers or practitioners that meet, accept, and comply with the State reimbursement, quality and utilization standards specified in the State’s waiver request.
(2) An agency may qualify for a waiver under this paragraph (f) only if its applicable State standards are consistent with access, quality and efficient and economic provision of covered care and services and the restrictions it imposes—
(i) Do not apply to beneficiaries residing at a long-term care facility when a restriction is imposed unless the State arranges for reasonable and adequate beneficiary transfer.
(ii) Do not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services; and
(iii) Do not apply in emergency circumstances.
(3) Demonstrated effectiveness and efficiency refers to reducing costs or slowing the rate of cost increase and maximizing outputs or outcomes per unit of cost.
(4) The agency must make payments to providers furnishing services under a freedom of choice waiver under this paragraph (f) in accordance with the timely claims payment standards specified in § 447.45 of this chapter for health care practitioners participating in the Medicaid program.

Basically, to argue a violation of 42 CFR 431.55, you would have to demonstrate that NC violated or is violating the above regulation by not providing services “consistent with access, quality and efficient and economic provision of covered care and services.”

So, while it is true that NC has requested and received permission from the Center of Medicare and Medicaid Services (CMS) to restrict access to providers, that fact may not be constitutional.

Someone just needs to challenge the Waiver’s waiver.

MCO CEO Compensated $400,000 Plus Bonuses with Our Tax Dollars!

On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.

$400,000 a year, plus bonuses.  Apparently, I got into the wrong career; the public sector seems to pay substantially more.

Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!! To manage 16 counties’ behavioral health care services for Medicaid recipients.

For comparison purposes, the President of the United States earns $400,000/year (to run the entire country). Does the CEO of Cardinal equate to the President of the United States? Like the President, the CEO of Cardinal, along with all the other MCOs’ CEOs, are compensated with tax dollars.

Remember that the entire purpose of the MCO system is to decrease the risk of Medicaid budget overspending by placing the financial risk of overspending on the MCO instead of the State. In theory, the MCOs would be apt to conservatively spend funds and more carefully monitor the behavioral health care services provided to consumers within its catchment area to ensure medically necessity and not wasteful, unnecessary services.

Also, in theory, if the mission of the MCOs were to provide top-quality, medically necessary, behavioral health care services for all Medicaid recipients in need within its catchment area, as the MCOs often tout, then, theoretically, the MCOs would decrease administrative costs in order to provide higher quality, beefier services, increase reimbursement rates to incentivize health care providers to accept Medicaid, and maybe, even, not build a brand, new, stand-alone facility with top-notch technology and a cafeteria that looks how I would imagine Googles’ to look.

Here is how Cardinal’s building was described in 2010:

This new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge.  The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room.  This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine.  The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.

The MCOs are not private companies. They do not sell products or services. Our tax dollars comprise the MCOs’ budget. Here is a breakdown of Cardinal’s budgetary sources from last year.

Cardinals budget

The so-called “revenues” are not revenues; they are tax dollars…our tax dollars.

78.1% of Cardinal’s budget, in 2014, came from our Medicaid budget. The remaining 21.7% came from state, federal, and county tax dollars, leaving .2% in the “other” category.

Because Cardinal’s budget is created with tax dollars, Cardinal is a public company working for all of us, tax paying, NC, residents.

When we hear that Tim Cook, Apple’s CEO, received $9.22 million in compensation last year, we only contributed to his salary if we bought Apple products. If I never bought an Apple product, then his extraordinarily high salary is irrelevant to me. If I did buy an Apple product, then my purchase was a voluntary choice to increase Apple’s profits, or revenues.

When we hear that Cardinal Innovations paid $424,975 to ousted CEO, Pam Shipman, over and above her normal salary of $400,000 a year, we all contributed to Shipman’s compensation involuntarily. Similarly, the new CEO, Richard Toppings, received a raise when he became CEO to increase his salary to $400,000 a year. Again, we contributed to his salary.

A private company must answer to its Board of Directors. But an MCO, such as Cardinal, must answer to tax payers.

I work very hard, and I expect that my dollars be used intelligently and for the betterment of society as a whole. Isn’t that the purpose of taxes? I do not pay taxes in order for Cardinal to pay its CEO $400,000.

For better or for worse, a large percentage of our tax dollars, here in NC, go to the Medicaid budget. I would venture that most people would agree that, as a society, we have a moral responsibility to ensure that our most vulnerable population…our poorest citizens…have adequate health care. No one should be denied medical coverage and our physicians cannot be expected to dole out charity beyond their means.

Hence, Medicaid.

We know that Medicaid recipients have a difficult time finding physicians who will accept Medicaid. We know that a Medicaid card is inferior to a private payor card and limits provider choice and allowable services. We know that certain services for which our private insurances pay, simply, are not covered by Medicaid. Why should a Medicaid-insured person receive sub-par medical services or have more difficulty finding willing providers, while privately insured persons receive high quality medical care with little effort?  See blog or blog.

Part of the trouble with Medicaid is the low reimbursements given to health care providers. Health-care consulting firm Merritt Hawkins conducted a study of Medicaid acceptance rates which found that just 45.7 percent of physicians are now accepting Medicaid patients in the U.S.’s largest 15 cities and the numbers worsen when you look at sub-specialties.

The reimbursement rates are so low for health care providers; the Medicaid services are inadequate, at best; and people in need of care have difficulty finding Medicaid physicians. Yet the CEO of Cardinal Innovations is compensated $400,000 per year.

Cardinal has 635 employees. Its five, top-paid executives are compensated $284,000-$400,000 with bonuses ranging $56,500-$122,000.

Richard Topping, Cardinal’s new CEO, told the Charlotte Observer that “it doesn’t cut into Medicaid services.”

He was also quoted as saying, “It’s a lot of money. It is. You’ve just got to look at the size and the scope and the scale.”

In contrast, Governor McCrory is compensated approximately $128,000.  Is McCrory’s “size, scope, and scale” smaller than the CEO’s of Cardinal?  Is the CEO of Cardinal “size and scope and scale,” more akin to the President of the US?

“We are a public entity that acts like a private company for a public purpose,” Toppings says.  Each MCO’s Board of Directors approve salaries and bonuses.

Cardinal is not the only MCO in NC compensating its CEO very well.  However, according to the Charlotte Observer, Cardinal’s CEO’s compensation takes the cake.

Smokey Mountain Center (SMC) pays its Chief Medical Officer Craig Martin $284,000 with a $6,789 longevity bonus.

Four years ago, before the initial 11 MCOs, the administrative cost of the MCOs was nonexistent (except for the pilot program, Piedmont Behavioral Health, which is Cardinal now).  Implementing the MCO system increased administrative costs, without question.  But by how much?  How much additional administrative costs are acceptable?

Is it acceptable to pay $400,000+ for a CEO of a public entity with our tax dollars?

A Brave New World With Mergers and Acquisitions of Behavioral Health Care Providers: Not Always Happily Ever After!

Unintentionally, I misrepresented the Benchmark panel discussion on which I appeared last Thursday. See blog.  I thought that I would be sitting on the panel along with MCO representatives. I honestly cannot tell you from where I got this idea. Maybe it was a subconscious desire. Regardless, the panel discussion was about merges and acquisitions among behavioral health care providers. While the subject of managed care organizations (MCOs) did come up, managed care was not the primary subject.  And the only MCO representative that I saw was Smokey Mountain’s attorney.

panelpic2

Nevertheless, the panel discussion went fantastic and was informative for those who attended.  I will summarize the panel discussion here for those who could not attend.  First, if you are a behavioral health care provider in NC, joining an association, such as Benchmarks, is an asset.  Not only do you get the benefit of attending educational programs, but you also have the opportunity to meet other behavioral health care providers across the state at the events.  You never know the potential relationships that could be created by attending a Benchmark event.

Going back to the panel…

There were 5 people sitting on the panel.  Besides myself, the panel consisted of Robert Shaw, Senior Counsel with me at Gordon & Rees, Frank Williams, a broker who facilitates mergers and acquisitions for health care providers, and two CEOs of health care providers who have undergone successful mergers and/or acquisitions.

The general consensus of the panel was that the future of behavioral health care will be larger companies which offer multiple services, instead of mom and pop shops that provide few types of services.  The panel was intended to bring potential mergers/acquisitions together in one venue and to educate the providers on “Do’s and Don’ts of Merging/Acquiring,” which is summarized below.

This consensus is generally derived from the MCO atmosphere here in NC.  Right or wrong, the MCOs are operating in closed networks and have the financial incentives to save money by contracting with fewer providers and decreasing authorizations for Medicaid services requested by Medicaid recipients.  See blog. And blog. And blog.

The MCOs seem to be terminating or refusing to contract with smaller health care providers, which, in turn, incentivize small health care providers to join other providers in order to grow its footprint.

Merging or acquiring a company is similar to partnering with another person in marriage.  Both parties have to familiarize themselves with the other’s habits, expectations, learn the other’s faults/liabilities, and, ultimately, have to work together on projects, issues and other matters.  And as we can discern from today’s high divorce rate, not everyone lives happily ever after.

Some marriages, as well as mergers, simply do not work.  Others live happily ever after.

The two provider panelists shared successful merger/acquisition stories.  Both shared experiences in creating new and larger entities effectively.  Both panelists were happy with the mergers/acquisitions and hopeful as to what the future will bring both new entities.

But all mergers and acquisitions do not have happy endings.  The two entities do not always live happily ever after.

Robert and I shared a story of an acquisition from Hades. There is no other way to describe the outcome of the acquisition.

The story of these two companies begins with the fact that the companies leased space in the same building.  One company was on floor 2 and the other was on floor 1.  The staff knew each other in passing.

The problem with the merger of these companies stemmed from a difference in culture.

Theoretically, the two companies did everything right.  The owner of the company getting acquired agreed to stay and work for the company buying it in order to ensure consistency. The buying company agreed to hire all the seller’s employees at their current salaries.  The acquisition was to be seamless.

The problems arose when news of the acquisition passed to the employees.  There was genuine discontentment with the arrangement.  The employees from the seller reacted with hostility and resentment.  Prior to the acquisition, the seller was fairly lax in regulatory compliance.  For example, if a service note was not drafted and filed the date of services….eh?…not that big of a deal.  Well, the buyer had strict document compliance rules for daily service notes.  Anytime more stringent policies are enacted on employees, there is sure to be a negative reaction.  The buyer also expected the seller’s employees to provide more services for the same salary received before the acquisition.

There was no legal or logical step omitted in the acquisition of the one company to the other.  On paper, the acquisition should have been successful.  But, then, personalities got in the way of happily ever after.

The other panelists offered great advice as to mergers and acquisitions, both from the providers’ view and a broker’s view.  I have compiled the advice that I recall below.  I have taken the liberty to provide analogous dating advice, as well, since marriages and mergers/acquisitions are so similar.  Hope it helps!!

Do’s and Don’ts of Mergers/Acquisitions

  • Do not let the secret out.

One provider panelist explained that if your employees learn of a possible merger/acquisition, they will kill the deal. Confide only in the CEO of the firm of which you are looking to merge, acquire, or sell.  Those dating: Never tell other that you want to marry (until the appropriate time).

  • Look outside your catchment area.

The reason companies merge/acquire is to grow.  Think of potential companies outside your own catchment area to grow even more.  For example, if you are in Alliance’s catchment area, think of merging with a company in ECBH/Eastpointe’s area.  Those dating: Have you exhausted your resources? Think of others, such as church, Match.com, etc.

  • Do your due diligence

This is a task as important as the oxygen you breath.  The last thing that you want is to acquire or merge with a company that owes $500,000 in employment taxes or an alleged overpayment.  Part of due diligence will be to check the credentials of every single staff member.  If someone is acting in the role of a LCAS, ensure the person is appropriately licensed.  Those dating: Is he/she employed? Have significant debt?

  • Review the other company’s documentation policies

This could be lumped into the due diligence section, but I think its importance is worth emphasizing.  Whatever service(s) the other company provides, what are its policies as to documentation? Does the provider have a computer program to maintain electronic health records (EHR)? Does it employ paper copies? Does the other company require the providers to submit daily service notes? Look at your own documentation policies.  Contemplate whether your own documentation policies would mesh well with the other company’s policies.  Those dating: How does your potential partner document spending, taxes, and calendared events?

  • Analyze both company’s corporate culture

Merging or acquiring a company is difficult in many ways, but it’s also hard on staff.  Imagine walking into work one day and you notice that the staff had doubled…or tripled.  And you and your colleagues are being told what to do by someone you never met.  This is not an uncommon occurrence with mergers and acquisitions.  Sometimes accepting change of supervision or team members can be a bitter pill to swallow.  How will you work through employee issues?  Personality clashes?  Ego fights?  Those dating: Analyze both person’s personalities, dispute resolutions, religion and beliefs.  Do you like his/her friends?

In addition to the potential conflicts with employees that stay with the merged entity, you also need to contemplate which employees, if any, may, potentially leave the new entity.  Disgruntled employees are a liability.  Those dating: How does he/she treat ex-partners?

  • Research the company’s relationship with its MCO

In our current MCO atmosphere, it is imperative to know, before merging or acquiring, whether the company has a good relationship with its MCO.  What if you acquire the company and its MCO refuses to continue to contract with the new entity.  Knowing the company’s relationship with the MCO is not an absolute.  As in, the company may believe it to have a good relationship with the MCO, while, in truth, it does not.  Ask to review some correspondence between the company and the MCO to discern the tone of the communications.  Those dating: How does he/she treat his/her mother/father?

  • Surround yourself with knowledge

Have a broker and an attorney with expertise in Medicaid.  Those dating: What do your friends think?

To watch the video of me speaking as a panelist for Benchmark, click here.  Scroll down until you see the video with Robert and me.

Otherwise, I hope you live happily ever after!

Knicole Emanuel: Panel Discussion – David Is To Goliath As NC Behavioral Health Care Providers Are To MCOs

Isn’t that analogy apropos? (And it’s not mine…its Benchmarks’)

I will be sitting on a panel today in Raleigh, NC.  See below.

A wonderful association, Benchmarks, is hosting a panel discussion for behavioral health care providers. While it is meant for smaller providers, in my own humble opinion, all behavioral health care providers would benefit from this panel discussion.

Senior Counsel, Robert Shaw, and I will be sitting on the panel…with managed care organizations (MCO) representatives.  It is without question that I have not been a big fan of the MCOs.  If I were to suggest otherwise, I believe that my blog followers would scoff. However, I am interested in hearing these MCO representatives’ side of the argument.

Will these MCO reps merely parrot? Or will they truly engage in worthwhile conversations to understand what it is like for a behavioral health care provider in NC today?

Feel free to join the discussion at 12:30-2:30.  Below is the Evite: 3801 Hillsborough St.

david and goliath

A Dose of Truth: If an MCO Decides Not to Contract With You, YOU DO HAVE RIGHTS!

It has come to my attention that the managed care organizations (MCOs) are spreading non-truths.  As to appeal rights and rights, in general, of a Medicaid provider.  You may not hear the truth elsewhere, but you will hear the truth here.

Supposedly, the truth shall set you free. If this is true, then why do so many people lie? I believe that people’s desire for money, power, status, greed and/or others to look at them with respect are the some of the catalysts of many lies.

Of course, our old friend Aesop told many tales of the virtue of honesty.  My favorite is the “Mercury and the Woodman.”

A Woodman was felling a tree on the bank of a river, when his axe,
glancing off the trunk, flew out of his hands and fell into the water.
As he stood by the water’s edge lamenting his loss, Mercury appeared
and asked him the reason for his grief. On learning what had happened,
out of pity for his distress, Mercury dived into the river and,
bringing up a golden axe, asked him if that was the one he had lost.
The Woodman replied that it was not, and Mercury then dived a second
time, and, bringing up a silver axe, asked if that was his. “No,
that is not mine either,” said the Woodman. Once more Mercury dived
into the river, and brought up the missing axe. The Woodman was
overjoyed at recovering his property, and thanked his benefactor
warmly; and the latter was so pleased with his honesty that he made
him a present of the other two axes. When the Woodman told the story
to his companions, one of these was filled with envy of his good
fortune and determined to try his luck for himself. So he went and
began to fell a tree at the edge of the river, and presently contrived
to let his axe drop into the water. Mercury appeared as before, and,
on learning that his axe had fallen in, he dived and brought up a
golden axe, as he had done on the previous occasion. Without waiting
to be asked whether it was his or not, the fellow cried, “That’s mine,
that’s mine,” and stretched out his hand eagerly for the prize: but
Mercury was so disgusted at his dishonesty that he not only declined
to give him the golden axe, but also refused to recover for him the
one he had let fall into the stream.

The moral of the story is “Honesty is the best policy.”

But is it?  In our world, we do not have fairies, Roman gods, good witches, fairy godmothers, wood sprites, or wizards to hold us accountable for our lies.  If George Washington never admitted that he chopped down the cherry tree, no wood nymph would have appeared, angered by his lie, only to throw his ax into the Potomac.

So who holds us accountable for lies?

As a Christian, I believe that I will be held accountable in my afterlife.  But, without getting too profound and soapbox-ish, I mean who…NOW…presently…in our lives…holds us accountable for lies?

Obviously, when we were children, our parents held us accountable.  Oh boy…the worst thing for me to hear growing up was for my father to say, “I am so disappointed in you.” 

What about the MCOs? Who or what holds the MCOs accountable? And what is this non-truth that the MCOs may or may not be telling providers that has spurred me to write this blog?

Recently, many MCOs have (1) terminated contracts with providers; (2) refused to renew contracts with providers; and (3) conducted desk reviews and interviews of providers only to decide to not contract with many providers; thus leaving many small businesses to bankruptcy and closure…not to mention severing the relationships between the Medicaid recipients and their providers.

It has come to my attention that, when the MCO is asked by a provider whether the provider can have a reconsideration review or whether the provider has any appeal rights as to the MCO’s adverse decision, that the MCOs are telling providers, “No.”  As in, you have no appeal rights as to the MCOs decision to not contract with you. 

This is simply not true.

There are so few providers in NC willing to accept Medicaid because of the administrative burden of Medicaid regulations and the already low reimbursement rates.  To then have the audacity to “willy nilly” or at its own whim subjectively decide that it [the MCO] does not want to contract with you and then tell you that its “willy nilly” or subjective whim cannot be challenged legally eats at the heart of this country’s core values.  Do we not applaud small business owners?  Do we not applaud those small business owners dedicated to serving the population’s most needy?  Do we not promote due process?  Do we not promote truth, justice and the American way?

Or are those promotions clouded when it comes to money, power, status, greed, and desire for respect?

So, I say to you [providers who have been denied a Medicaid contract with an MCO despite having a contract with the Department of Health and Human Services (DHHS) to provide Medicaid services throughout the state of North Carolina], YOU HAVE RIGHTS

You do not need to merely accept the decision of the MCO.  You do not need to simply close up shop…fire your staff…and try a new career.  You have a choice to fight…legally.

But you DO need to know a few things.

First, lawyers are expensive. Period and without question.  So whatever law firm you hire, understand that the cost will more than you ever expected.  (Please understand that I am not advocating you to hire my firm.  Parker Poe and Poyner Spruill both have fantastic attorneys in this area.  Just hire someone knowledgable.)  It’s even a good idea to have consultations with more than one firm.  Find an attorney you trust.

Second, call your liability insurance.  There is a chance that your liability insurance will cover all, or a portion of, your attorneys’ fees.  But do not allow your insurance company tell you whom to hire.  Because this area is specialized there are few attorneys well-versed.  Again, go to the firms I mentioned above.

Thirdly, you may not win.  While the success rate is extremely high, there are some clients who are simply not going to win.  For example, if your documentation is so poor.  Or, for example, you really are not a great provider.  Remember, the MCOs do have a point to try to only contract with great providers.  I only disagree with the way in which the MCOs are deciding to not contract with providers.  It seems “willy nilly” and subjectively arbitrary.  But, depending on your exact circumstances, you do have a chance of success.

Fourth, you will have to testify.  I know it is scary, but I can think of very few circumstances during which the provider would not testify.  The judge needs to hear your story….why you should be allowed to continue to provide Medicaid services.

Fifth, the lawsuit will not shield you from future issues with the MCO.  Until DHHS decides to actually supervise the MCOs properly (or maybe even after that), the MCOs seem to wield the power.

So why even fight legally?  You certainly aren’t guaranteed success.  It will certainly cost you a pretty penny. 

Maybe the answer for you is to not fight.  Only you can make that decision.  But I hope someone holds the MCOs accountable for telling providers that the providers have no recourse…no appeal rights…for the MCOs simply not contracting with the provider.

Because if honesty is the best policy, the MCOs’ policies leave much to be desired. Someone needs to throw their axes into the Potomac!

An Ominous Cloud Looms Over NC’s Mental Health System! And Radix Malorum Est Cupiditas!

“There is an ominous cloud over North Carolina’s mental health care system that many fear is limiting access to care and treatment by those who need it the most,” wrote Jason deBruyn in Friday’s Triangle Business Journal article titled, “Mental Health Block.”

TBJ Pic

(Thanks, Jason, for the nice spread:) )

Two phrases that can never be good when linked together: “an ominous cloud” and “mental health care system.”  Upon reading “ominous cloud,” I get this dark (dare I say ominous?), dreary outlook on whatever the “ominous cloud” is  over.  Then to discover that the “ominous cloud” is over our mental health system here in NC, I get goosebumps and a pit in my stomach (and a bit of disgust at the sheer ineptness of the Department of Health and Human Services (DHHS)).

What is causing that “ominous cloud” over our mental health system? Well, according to Jason, the managed care organizations (MCOs) that were implemented across the state only this past year.

What are these MCOs you talk of?

The MCOs were established to manage the Medicaid mental health, developmentally disabled, and substance abuse services in NC.  If you want mental health services or are attempting to get prior authorization on behalf of a Medicaid recipient, then the buck stops with the MCO.  See my blog: “NC MCOs: The Judge, Jury and Executioner.” Or “NC MCOs: Accountability Must Be Somewhere!”

Here is a list of the MCOs along with the “correct toll free number” in case you wanted it:

LME-MCO CORRECT TOLL FREE NUMBER
Alliance Behavioral Health 1-800-510-9132
Cardinal Innovations Healthcare Solutions 1-800-939-5911
CenterPoint Human Services 1-888-581-9988
CoastalCare 1-855-250-1539
East Carolina Behavioral Health (ECBH) 1-877-685-2415
EastPointe 1-800-513-4002
MeckLINK 1-877-700-3001
Partners Behavioral Health Management 1-888-235-4673
Sandhills Center 1-800-256-2452
Smoky Mountain Center 1-800-849-6127
Western Highlands Network 1-800-951-3792

Going back to the “ominous cloud…”

Jason writes further that “under the state’s new payment system, MCOs have the unbridled authority to terminate providers in an attempt to keep costs down – with little accountability for the process.”

The only word I would change is “little” to “no.” But, then, maybe Jason was referring to the little accountability as arising from advocates such as myself who are fighting for the providers.

Have I not been saying this all along?  The MCOs can terminate providers with little (or no) accountability!! To save money!!

And who suffers?? The providers, yes.  And the Medicaid recipients!!   “Patients aren’t going to know where to go to access services,” Goldston says. “Those patients are going to suffer.”

Why? Why are these MCOs terminating providers and denying services to our most-needy population??  Have they no heart? No conscience?

One word answers all these questions:

Money

Radix malorum est cupiditas, meaning, in Latin, greed is the root of all evil.  In the Bible, 1 Timothy 6:10, starts “For the love of money is the root of all kinds of evil…”

“MCOs register as not-for-profit organizations and receive fixed amounts of money from the state, called their “capitation.” Unlike physical health care providers, when Medicaid patients receive mental health services, their providers bill these MCOs instead of the N.C. Department of Health and Human Services. If an MCO doesn’t spend up to its capitation level, it keeps the remainder. And therein lies the problem, say provider advocates,” writes Jason. (emphasis added).

And he is absolutely correct!

What was the MCOs’ response?

“The myth that we are trying to eliminate every provider in our network is not an accurate statement,” says Rob Robinson, chief operating officer for Alliance Behavioral Healthcare, the MCO that covers Wake, Durham, Johnston and Cumberland counties.

Mr. Robinson’s comment, however, is incorrect on, at least, two fronts: (1) the “myth” is not that the MCOs are trying to eliminate every provider; and (2) it is no myth.  The MCOs are, without question, terminating as many providers from the networks as possible without the appearance that services will not get rendered.  The MCOs need a certain number…just to appear that services are not getting cut.

So what is that magic number?

A client informed me a couple of months ago that Smokey Mountain Center (SMC) told him that SMC wants two providers per service per county.  If correct, hundreds and hundreds of providers will be put out of business.  And, hello…I thought the current Republican administration was pro small business!

Alliance has chopped its provider network recently.

Just recently, Alliance called for Requests for Proposals (RFPs) from all contracted providers within its catchment area.  Kinda like a tryout.  When I was in college at NCSU, I was on the cheerleading team.  I will never forget being a freshman and learning these routines that I would have to perform in front of a judge’s panel.  Literally hundreds of young men and women were all learning the same routine…all to perform for the tryouts.  In the middle of learning the routine with hundreds of people, I looked around and realized that only 8 girls and 8 guys would be chosen.  Which meant 90% of the people there would not be on the team.  I tried to remove the thought from my head.

When the D-Day arrived, there was simply a white piece of paper taped to the gymnasium’s window on the outside for anyone to see.  I had to walk up to the piece of paper, shuffle through the small crowd surrounding it, ignore others’ tears and congratulations, and look for my name.

Holding my breath, I searched for “Knicole Carson” (my maiden name). And I did not see it.  For a moment, I was crushed.  Then I saw “Nicole Carson.”  My name was on there, just misspelled.

What does college cheerleading tryouts have to do with NC Medicaid?

Alliance’s RFPs created a provider tryout.  Hundreds submitted.  Only a few were chosen.  Those few chosen were written on a piece of paper for all to see, and providers had to scan the list to see if they were chosen.

For Wake county, Alliance decided to award a 1 year contract for community support team (CST) to only 6 companies.  For the entire county of Wake, Alliance has determined that only 6 companies may provide CST to Medicaid recipients (with a 1 year contract).  Only 6 names were on the list.

For Durham county, Alliance decided to award a 1 year contract for CST to only 5 companies.  For the entire county of Durham, Alliance has determined that only 5 companies may provide CST (with a 1 year contract).  Only 5 names were on the list.

Now let’s go back to Mr. Robinson’s comment:

“The myth that we are trying to eliminate every provider in our network is not an accurate statement,” says Rob Robinson, chief operating officer for Alliance Behavioral Healthcare, the MCO that covers Wake, Durham, Johnston and Cumberland counties.

You are right, Mr. Robinson, you aren’t trying to eliminate “every provider.”  Just the ones that Alliance, in its subjective discretion, doesn’t want to deal with (I don’t care that I ended the sentence in a preposition).

Oh, and what about our State Plan?

Our State of North Carolina MH/DD/SA  Health Plan Renewal, states, in pertinent part, as an answer regarding concerns as to provider choice with MCOs, “network capacity studies and gap analyses were conducted by Cardinal Innovations Healthcare Solutions (CIHS) annually and prior to expansion the coverage area, and by the new PIHPs prior to start-up, as required. Access and provider choice appear to be as good as or better than it was prior to waiver implementation, although there is room for improvement in several areas.” (emphasis added).

Obviously, that was written a while ago and Cardinal, an MCO, was the entity conducting the study (cough, cough…bias…cough).  Regardless, we told the federal government that “provider choice appears to be as good or better than it was prior implementation.”  Are you kidding me???

How many providers didn’t make Alliance’s cut?

How many providers have MeckLINK terminated? Smokey Mountain?

Jason deBruyn was dead on when he said, “There is an ominous cloud over North Carolina’s mental health care system that many fear is limiting access to care and treatment by those who need it the most.”

The Future of NC Medicaid Behavioral Health: Will We Soon Be Down to Eight MCOs? Two More Monkeys Jumping off the Bed?!

Remember the song “10 Little Monkeys Jumping on the Bed?”

Ten little monkeys jumping on the bed.
One fell off and broke his head.
Mama called the doctor and the doctor said,
“No more monkeys jumping on the bed!”

Nine…Eight…Seven…Six…Five…Four…Three…

I used to love that song as a kid.  I have two siblings and I distinctly remember our jumping-on-the-bed-game-while-trying-to-push-the-others-off-game.  Many times we would sing “10 Little Monkeys Jumping on the Bed,” while trying to push our siblings off the bed.

Here in North Carolina we started with 11 managed care organizations (MCOs) across NC to manage behavioral health care for Medicaid recipients.

MCO map

See the map? We began with 11 MCOs.  Today, we have 10 (Western Highlands Network (WHN) is no more) with strong possibilities of reducing the number of MCOs to 9…and then 8.

Rumor has it that Centerpoint Human Services (Centerpoint) and MeckLINK Behavioral Healthcare (MeckLINK) are on the brink of nonexistence.  “One fell off and broke his head.”

Centerpoint and MeckLINK are, however, moving forward to nonexistence in entirely different ways.  Centerpoint is looking to merge with two MCOs.  Both Partners Behavioral Health Management  (Partners) and Smoky Mountain Center (SMC) are getting updates as to Centerpoint’s merger plans.  Will Centerpoint break up its catchment area and merge with 2 MCOs? Or are those 2 MCOs the contenders?  Not sure. But either way, Centerpoint will be eliminated in the near future.

If SMC absorbed Centerpoint entirely, SMC will be HUGE!!

SMC began with Alexander, Alleghany, Ashe, Avery, Caldwell, Cherokee, Clay, Graham, Haywood, Jackson, Macon, McDowell, Swain, Watauga and Wilkes Counties (15 counties).  Then SMC ate up WHN and acquired Buncombe, Henderson, Madison, Mitchell, Polk, Rutherford, Transylvania and Yancey counties. (15 + 8 = 23 counties).

Centerpoint manages behavioral health care for Forsyth, Stokes, Davie and Rockingham counties.

(15 + 8 + 5 = 28 counties).  Over 1/4 of NC’s counties.  The MCO map would be dominated by dark blue, and, as North Carolinians, let me ask you, do we want our state dominated by dark blue? What about Wolfpack red? 

Here is the MCO map, as of October 2013:

October 2013 MCOs

Partners’ catchment area is light yellow and includes Burke, Catawba, Cleveland, Gaston, Iredell, Lincoln, Surry, and Yadkin counties (all in the west and bordering SMC’s catchment area).  If SMC continues to expand, like Stephen King’s “The Blob,” SMC may ooze into Partners. 

Unlike Centerpoint, at least on paper, MeckLINK is not willingly jumping off the bed and breaking its head.  MeckLINK is the only MCO run by a county (Mecklenburg county).  See the lone red county? In May, state lawmakers passed a bill that says a county can’t run its own organization.  Mecklenburg County Commissioners voted last Tuesday to work out a deal with Cardinal Innovations Healthcare Solutions (Cardinal) or dissolve MeckLINK when its contract expires next April.

Cardinal’s catchment area is purple and includes 15 counties.

But do not underestimate the power of usurping MeckLINK, even though it is only one county.  Mecklenburg county is one of NC’s most populous counties, which means it receives a hefty Medicaid budget.

Ten little MCOs jumping on our heads
One fell off; its assets in the reds,
DMA called the doctor and the doctor said
No more MCOs jumping on our heads.
 
Nine little MCOs jumping on our heads…

So which MCOs will survive? How soon until we only have 8 MCOs? Will all the MCOs be replaced with out-of-state, huge MCOs?  Will the future MCOs manage all Medicaid services?  Will there be carve-outs?  These are unanswered questions as we embark into the future of NC Medicaid managed care. 

One thing we do know is we started with 11 MCOs (all of whom were deemed solvent and competent by a state contractor) and, not even 1 year later, WHN falls…MeckLINK falls…and Centerpoint falls.

11…10…9…8…

Maybe the 11 MCOs were not solvent and competent in the first place.  Why else would the MCOs keep jumping off and breaking their heads?  Silly monkeys.

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.

CLOSED NETWORK

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.

NOT STATEWIDE

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.

A GLIMPSE INTO THE FUTURE

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.

MeckLINK: Parting Is Such Sweet Sorrow!…or…And Then There Were Nine…And Counting!

“Parting is such sweet sorrow, That I shall say good night till it be morrow.” Anyone know who said that famous line?  Juliet said it to Romeo (William Shakespeare) in Act II, Scene 2 of Romeo and Juliet.  Much different from Act 5, Scene 3 when Romeo commits suicide by poison when he believes his beloved Juliet is dead.

“Here’s to my love! (drinks the poison) O true apothecary, Thy drugs are quick. Thus with a kiss I die.”

Are we soon to part with MeckLINK Behavioral Health (“MeckLINK”)?

As of now, MeckLINK is one of 11 managed care organizations (MCOs) managing behavioral health care for Medicaid recipients in North Carolina.  We will say good-bye to Western Highlands September 30, 2013, so starting October, we will have 10 MCOs.

Is MeckLINK the next doomed MCO?  The next MCO to go poof!

According to the Charlotte Observer, Phil Endress, the CEO of MeckLINK, who was under fire a couple of weeks ago before the Mecklenburg county commissioners, has resigned, effective September 30, 2013.  Coincidental that Endress is resigning the day that Western Highlands is scheduled to disappear? Poof!

Mr. Endress appeared in North Carolina in August 2012 to run MeckLINK.  Since August 2012 (basically 1 year, give or take) Endress hired over 200 employees to run MeckLINK. (Talk about administrative burden).

So what happens to all the 200 employees hired by Endress when MeckLINK goes poof?  Who knows.  But, at least, Endress has a job.  He is moving to Jersey City, New Jersey, to become a director for a private mental health care company.  The 200 employees Endress hired? Well, he is not taking them with him.

What will become of mental health in Mecklenburg county?

Well, I know for many health care providers in Mecklenburg county parting will  NOT such sweet sorrow.  It will just be sweet. Recently, MeckLINK has terminated multiple provider agencies from its network (in our opinion without merit) and denied services for Medicaid recipients (in our opinion that are medically necessary).  But what will happen to Mecklenburg county Medicaid providers and recipients if MeckLINK goes poof?

Rumor has it that either Smokey Mountain Center or Alliance Behavioral Health will take over.

If Smokey takes over MeckLINK, Smokey will be, by far the largest MCO in North Carolina, geographically.   Smokey already covers:Serving individuals with mental health, developmental disability and substance abuse issues in Alexander, Alleghany, Ashe, Avery, Caldwell, Cherokee, Clay, Graham, Haywood, Jackson, Macon, McDowell, Swain, Watauga and Wilkes Counties

Add the 8 counties that Western Highlands is handing over to Smokey Sept. 30th and Mecklenburg county and Smokey would manage 24  of the 100 counties in North Carolina.  Whew! That’s a large jurisdiction.

If, on the other hand, Alliance takes over MeckLINK, then Alliance will not be the largest MCO in area, but, perhaps, the most Medicaid-funded and largest as to population-served.

Alliance currently manages Wake, Durham, Johnston and Cumberland counties.  Add Mecklenburg county and Alliance is in control of the most populated cities in North Carolina: Raleigh, Durham, Charlotte, Smithfield (ok, Smithfield is not that big, but it has outlets!), Fayetteville, Apex, Garner, Clayton…the most populous cities and towns in NC.

We started with 11 MCOs. We are down to 9.  The song “Another One Bites the Dust,” comes to mind. [Bum, bum, bum].

Remember, McCrory seems to want to run the number down to 3.

6 more to bite the dust?

“The McCrory administration envisions three or four competing private managed care organizations would deliver Medicaid services, replacing the monopolistic Community Care of North Carolina model now in place”

Parting is such sweet sorrow.

Thy drugs are quick. Thus I die with a kiss.

Are we all to end like Romeo?

Remember, we started the MCO system THIS YEAR. (Not counting Cardinal, which was the test-model prior to all MCOs  going live).  As in 9 months ago.  How scary is it that the whole MCO system (11 MCOs to manage behavioral health for Medicaid recipients) is unraveling to 9 within 9 months of inception.  Where will we be a year from now?

Maybe McCrory is right.  We will have 3-4 MCOs.

It’s like Darwin’s theory.  Survival of the fittest.

Western Highlands and MeckLINK were the weakest.  Who is next?  Eastpointe?  East Carolina Behavioral Health?  Time will tell.  And apparently time is fairly swift.  Like the poison drunk by Romeo, we may not have to wait long to see which MCOs survive and which MCOs fail.

If I were a betting man (which, obviously, I am not), I would go “all-in” on Alliance or Smokey.