Mental health care in North Carolina has been changing, which can be difficult for both patients and providers.
Stock image
sad older man pic
Public-health officials, elected office holders, family members of mental-health patients and those working in the behavioral-health community all describe frustrations with getting one’s bearings amid the rapid pace of consolidation in North Carolina’s mental-health system since 2001. (Pixabay)

“Let me tell you it was a horrible nightmare — my staff was pulling its hair out,” Peggy Terhune said.

During the two decades that she’s overseen North Carolina mental health care provider network Monarch, the agencies Terhune has dealt with for Medicaid and state-funded insurance have undergone four rounds of consolidation. In 2001, there were 39 of them. By July of this year, there were just seven.

“I’m a very positive person, and when things don’t go well I try to figure it out,” she told Carolina Public Press. “But when they were first trying to figure out what they were doing, we weren’t getting paid.”

She, and the rest of the state, mostly have become accustomed to the model now.

And it may be changing again.

North Carolina’s model for providing access to behavioral health services since 2001 has been based on the idea of managed care. The state gave limited management entities/managed care organizations, or LME-MCOs, the task of managing both state-funded insurance and Medicaid payments to make certain that uninsured and underinsured North Carolinians could access mental-health care resources.

While no one says the model has been perfect, many proponents of it, like Mary Hooper of the NC Council of Community Programs, say the kinks can be worked out in time – if enough time is given. Hooper’s organization is a nonprofit association representing the interests of the government-operated LME-MCOs.

“We have today a system that … directs dollars to those who need them,” Hooper told CPP. “Why we would dismantle that and try to create something better is very confusing to me.”

According to Dave Richard, a deputy secretary for the North Carolina Department of Health and Human Services, (DHHS), and the overseer of LME-MCOs, nothing is set in stone.

“The General Assembly has multiple views of where LME-MCOs are going,” Richard said. “Some want it to stay, but others are looking elsewhere.”

How we got here

Only in the last 150 years has society not assumed those with behavioral health issues to be “possessed by demons,” wrote Mark Botts, a professor at the UNC School of Government, in a 2014 SOG publication. Before then, society placed those it considered mentally ill into jails and poorhouses simply to keep them away from the rest of the population. Through the work of advocates like Dorothea Dix, society in the mid-1800s began to see those with behavioral health issues as able to “be cured if treated in the right environment.”

For the next century, according to Botts, that “environment” was state mental institutions, with North Carolina’s Dorothea Dix Hospital in Raleigh opening in 1875. Broughton Hospital opened in 1883 in Morganton to serve Western North Carolina. After a wave of dissatisfaction with institutional care peaked in the mid-1950s, President Kennedy proposed the landmark Community Mental Health Centers Act (CMHCA). The act, passed in 1963, allocated federal funds to create community health programs, allowing patients with behavioral health issues to seek treatment closer to home through local providers.

In North Carolina and many other states, these programs became extremely popular. In 1960, just before the enactment of CMHCA, community health centers served just 26 percent of the North Carolinians seeking services, with the other 74 percent were still enrolled in state institutions. By 1970, community health centers were serving 68 percent of North Carolinians seeking services.

According to Botts, this change was driven in large part by a “period of increasing dissatisfaction … with the institutional model of care.”

In light of a rapid growth in demand for community services, the state decided to choose several providers to serve as “area authorities” – providers that would also be tasked with managing the funds and services that they and fellow providers issued.

However, by the 1990s, increasing evidence suggested area authorities were using their fiscal power to pay themselves for their own sometimes fraudulent services. The General Assembly decided it was time to separate those providing the services from those funding the services.

Creation and consolidation of LME-MCOs

With the passing of the 2001 Mental Health Reform Act, North Carolina’s 39 area authorities began to take on the appearance – though, until 2006, not the title – of LMEs, or limited management entities. The state no longer allowed these governmental entities to serve clients directly, instead expecting the LMEs to manage the state-funded insurance payments for the providers in their network.

The state also expected LMEs to consolidate among themselves and reduce their numbers. From 39 area authorities in 2001, the state went gradually down to 25 by 2007. That downward trend has continued even as policy goals have shifted over the last 15 years, with only seven LME/MCOs remaining after the most recent consolidation in July 2016. But back in 2001 the state hoped that this goal of fewer entities would reduce administrative overlap and help cut costs.

LME-MCO regions in North Carolina as of 2005.
LME-MCO regions in North Carolina as of 2005.

This initial period of consolidation was also when things became messy, according to former secretary of DHHS Lanier Cansler.

“Most of the consolidation happened (then), and it did happen a little fast,” Cansler told CPP. “The implementation ended up not being very good, so we lost a lot of services in some areas.”

This loss of services and rapid change in provider networks is what led advocates like Jack Register, president of North Carolina’s National Alliance of Mental Illness, (NAMI), to become concerned.

“Our issue is whether folks will have access to the right services at the right times,” Register told CPP. “I just want to be able to know who to send people to and, if the (LMEs) keep changing, I can’t.”

Register, a member of Governor Pat McCrory’s Task Force on Mental Health and Substance Abuse, says NAMI is the state’s “biggest critic and also their biggest supporter.” But, with the number of LMEs being consolidated from 39 to seven in the last 15 years, Register is one of many who is concerned about what the rapid pace of consolidation means for consumers of mental health services.

LME-MCO regions in North Carolina as of 2007.
LME-MCO regions in North Carolina as of 2007.

“We need to slow things down enough to see what good things LME-MCOs have been able to do before they get thrown out and potentially replaced,” Register said. “How are we going to be able to know if we’re fitting people’s needs if we keep changing things?”

Affecting consumers

According to Laurie Coker, executive director of the NC Consumer Advocacy, Networking and Support Organization, or NCCANSO, the switch to and consolidation of LME-MCOs has indeed helped the state utilize federal Medicaid dollars more effectively.

But in the course of pursuing that goal, they’ve pushed the quality of services “off their radar screen,” Coker told CPP.

She saw this firsthand when she served on the consumer and family advisory council (CFAC) for

LME-MCO regions in North Carolina as of 2013.
LME-MCO regions in North Carolina as of 2013. Regions are color-coded, with non-contiguous areas of the same color belonging to the same district, such as the blue areas in Western North Carolina or the purple areas near Charlotte and in the north central portion of the state.

CenterPoint, an LME-MCO that used to serve four counties in central North Carolina. Beginning in 2006, all LMEs were required to have CFACs, which bring together family members of consumers and direct consumers of mental health services to give LMEs an idea of where they could improve.

“But when I was (there), we would keep asking about (patient) outcomes and we would just get called ‘advocates,’ ” Coker said. “They’d say, ‘This is a business board, not an advocacy board.’ ”

In fact, LMEs aren’t businesses at all, but government agencies.

Not everyone who has served on a CFAC describes the same experience.

Nancy Baker, a former CFAC member for Western Highlands Network LME and current CFAC member for Smoky Mountain Center LME-MCO, believes in CFACs “100 percent” after 10 years of serving on them, she told CPP.

“As we (Smoky Mountain Center) get bigger, it becomes easier for people to fall through the cracks,” Baker said. “But I feel like (CFAC) is the best place that I can advocate for the issues that are important to me.”

LME-MCO regions in North Carolina as of 2016.
LME-MCO regions in North Carolina as of July 1, 2016.

The shifting regional boundaries that consolidation has generated are leaving many consumers confused about where to go when they need help, according to several observers.

Donna Lyerly, a former CFAC member for Western Highlands LME, told CPP that’s what happened when she had to “fight tooth and nail” to get treatment for her son, who had recently been diagnosed with schizophrenia.

“LME-MCOs have become such a big conglomerate,” Lyerly said. “There was one time when I had people that I could call when my son needed something, and that’s just nonexistent now.”

During the course of her son’s treatment, few treatment options were offered other than medication, which in his case only made things worse, Lyerly said.

“Once my son decided to stop treatment, he found that hiking is what helped him,” she said. “I’m not anti-drug, but I just think (treatment) is very individualistic. It should be for them to decide.”

State Rep. Verla Insko, D-Chapel Hill, a retired health program administrator, told CPP that these kinds of situations happen in part because, of all those involved with the behavioral-health care network, consumers have “the least access to power.”

“When we had the old area programs, everyone knew where to go,” she said. “They knew their providers. But now we keep changing things around and they stay confused.”

Mental health costs

Cansler remembers what inspired legislators to pursue a managed care model in 2001.

“Finance drove the whole issue of Medicaid reform,” he said. “One of the main reasons we went to LME-MCOs was to reduce cost … in light of the increasing cost of Medicaid reimbursements.”

Before LME-MCOs were used in North Carolina, providers were reimbursed for Medicaid patient procedures using a “fee-for-service” model. The fee-for-service model, which is the default for Medicaid payments nationally, allows providers to be reimbursed for each individual procedure they perform, including the office visit and lab tests.

But that model made Medicaid costs “unpredictable,” according to Botts.

“The more services providers provided and billed for in a given year, the greater amount of Medicaid money spent,” Botts wrote in his report on North Carolina mental health services.

The LME-MCO model, which states need a special waiver to use, gives state governments a lot more control over how much money will be spent for Medicaid procedures. The state government allocates a specific amount of money for LME-MCOs to manage and, using that money, they are expected to pay for all of the services their providers might need reimbursement for.

“There has been no reduction in the Medicaid funding,” Richard said. “That is set every year in a contract with (the federal government), so the legislature has not gotten involved in that.”

But what has been reduced since the LME-MCO model took hold is the amount of money from the state general fund that has been given to LME-MCOs and their underinsured patients.

According to Hooper, nearly 40 percent of North Carolinians with behavioral-health issues – whether mental illness, substance abuse or intellectual/developmental disabilities – rely on state-funded insurance.

“So, statistically speaking, if a hospital had 100 people show up with a behavioral-health issue, 40 of those people wouldn’t be covered by Medicaid or private insurance,” Hooper said.

LME-MCOs also depend on state appropriations for a substantial portion of their revenue. Because LME-MCOs are governmental organizations, any proceeds that they make are supposed to be reinvested in their communities, usually in the form of innovative services and facilities.

Some LME-MCOs have community reinvestment plans on their websites, detailing what their projected revenue will go toward in the coming years. These projects could include things like expansions for current facilities, innovative employee trainings and jail diversion programs.

“We love being able to deliver those types of services,” said Brian Ingraham, the CEO of Smoky Mountain Center LME-MCO. “But, with these reductions in (state) funding, that diminishes the investments we can make in the community.”

Affecting accountability

Some of those involved with behavioral health are concerned about the effectiveness of care and whether consumers can see results. Others are concerned more about the impact on the state’s budget and the efficiency of the LME-MCO model. Accountability encompasses some combination of these and other factors, though different parties disagree about the proper balance.

But the frequent consolidations of LMEs over the past decade have made it difficult to go back and monitor changes in spending, quality of care and efficacy, regardless of which priorities are assumed.

For example, the current seven LME-MCOs have only existed in their current forms since 2013. If one wanted to look back, whether it be at Smoky Mountain Center LME-MCO, Cardinal Innovations LME-MCO or Eastpointe LME-MCO, and examine past performance, one would have to examine the records of each of the former LMEs that consolidated in order to make the current LME-MCOs.

This brings up a question of consistency, according to Jack Register.

“When we think about consistency of services, we (NAMI) always think about people’s stories first,” Register said. “But (the state’s) idea of consistency is cost. You could almost say that we’re talking in different languages.”

Dave Richard of DHHS said that the state has been consistent in that they are currently “following a plan that’s already been in place.”

Secretary Rick Brajer’s commitment is to consolidate, because he believes that a larger, more sophisticated system is the answer to creating a strong system,” Richard said.

With regard to accountability, there are also questions about the level of oversight for providers. LME-MCOs are supposed to approve providers before they can begin receiving Medicaid reimbursements.

“Since mental-health reform started in the early 2000s, (Monarch provider network) has picked up 40 or 50 new (provider) companies,” Terhune said. “But only one program was doing a good job when we stepped in.”

Terhune said that she has “story after story” of the terrible conditions that some providers had when Monarch stepped in. One of the places smelled so badly of urine that her staff was forced to put all of its residents in hotels while it was cleaned.

“So,” she asked, “why are those providers allowed to be in business?”

The uncertain future

How long will LME-MCOs last in North Carolina?

Although no one knows for sure, 2023 is the year that experts like Cansler have their eyes on.

That’s because, in 2023, there’s a chance that – if certain factors are met – the state will outsource its entire Medicaid reimbursement program and have it be run by a corporation.

“It will depend on the upcoming election, and whatever happens in Washington,” Cansler said. “But it’s really all about whether we can convince (the Centers for Medicare & Medicaid Services) that we’ll have an integrated system.”

By “integrated system,” Cansler means a system that includes both behavioral and physical health care. As of now, Medicaid reimbursements for North Carolina’s physical health care still follows the national fee-for-service model. But, on June 1, Gov. McCrory sent the U.S. Centers for Medicare & Medicaid Services, or CMS, a request for waiver to integrate physical-health care with the behavioral-health care LME-MCO model. Observers told CPP they expect an initial answer from CMS next year, though that’s likely to lead to a period of negotiation between the state and federal authorities.

If approval ultimately comes through, Cansler said the state has 18 months to implement proposed changes. Those might be expected by mid-2019. The compromise legislation worked out by the state House and Senate would then trigger a four-year period for that combined system to operate.

The pace of all these anticipated shifts in the system should take the state to 2023, at which point lawmakers could put outsourcing in place.

Or whoever is running North Carolina by that time could instead put in place some yet unforeseen innovation to mental health services.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License. You may republish our stories for free, online or in print. Simply copy and paste the article contents from the box below. Note, some images and interactive features may not be included here.

Join the Conversation


Your email address will not be published. Required fields are marked *

  1. Every county in NC should have, at least, a mental health facility staffed with a psychiatrist, social worker(s) and other support staff. I also believe we should return to having mental health hospitals spread across the State that can treat and care for those so disabled. We are failing, and have failed, to care for those who need mental health care.

  2. That’s the best summary of the N.C. .mental health system — history, present status, and future possibilities — I’ve ever read. Thank you, Jessica Coates.