Michigan compromise budget for mental health: stalls complete takeover by medicaid health plans & funds pilot programs

In May 2017, The DD News Blog covered proposed radical changes to how services for people with developmental disabilities, mental illness, and substance abuse disorders will be delivered and who will be in control of the Medicaid dollars that pay for those services. The intent of proposed legislation was the eventual privatization of mental health services by “integrating” mental health and medical Medicaid services under the control of Michigan’s private Medicaid Health Plans.

The final budget compromise has at least stalled the complete privatization of the mental health system. The compromise preserves the current ten Prepaid In Patient Health Plans (PIHPs), regional administrative agency that distribute Medicaid funding for Mental Health services. There will also be as many as four pilot programs to test whether privatization, i.e. handing over control of Medicaid funding for mental health services to Michigan’s Medicaid Health Plans, can lower costs and expand services.

These are excerpts from an article in Crain’s Detroit Business, “Budget deal advances plan to test Medicaid mental health integration” by Jay Greene, 6/20/17.

“The budget deal allocates $2.8 million the first year to the fiscal 2017 budget to plan the pilots, and $3.1 million for fiscal 2018, which starts Oct. 1, to fund the pilots themselves. The $5.9 million funding includes $2 million in general state tax funds.

“The implementation of the pilots will be overseen by the state Department of Health and Human Services, which must hire by Aug. 1 an experienced project facilitator. The manager must establish performance metrics and pilot plans.”
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“Over the past 18 months, Michigan's 11 Medicaid health plans have lobbied legislators and the public to try a semi-privatized approach. They contend they can run an efficient $11.6 billion integrated delivery system, save the state several hundred million dollars of administrative money and plow back the savings into expanded services. There are an estimated 350,000 people in the state's Medicaid program with mental illness, developmental and intellectual disabilities, and substance abuse problems.

“But mental health advocates, providers and families object to Medicaid HMOs taking over the system — even to test an integrated approach with which more than two dozen states are experimenting. They believe health plans have insufficient experience at overseeing complex populations and argue that private profit motivations of the health plans will trump public service.”
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“[State Senator Mike] Shirkey, chair of the Senate health policy committee, has told Crain's the Medicaid HMOs will not be able to keep any savings. They must reinvest any savings into expanded services.

“Bob Sheehan, CEO of the Michigan Association of Community Mental Health Boards, said he is concerned that the budget language allows Medicaid health plans to contract outside of the several dozen established community mental health agencies and provider networks.

“‘Making the local community mental health (agency) only one of many providers in the pilot communities will immediately drain dollars from the community's mental health safety net ... leaving it unable to fulfill its statutory safety net role,’ Sheehan said Tuesday night in an email to Crain’s.”

Implementation of the pilot programs will include the following:

• That any changes made to a Medicaid waiver or Medicaid state plan to implement the pilot project must only be in effect for the duration of the pilot project.
• That the project is consistent with the stated core values as identified in the final report of the Section 298 workgroup in Public Act 268 of 2016.
• That updates are provided to the medical care advisory council, behavioral health advisory council and developmental disabilities council.