Mental health audit ruling could create chaos

July 31, 2013 

Americans didn’t need another reason to disapprove of government bureaucracy, but an auditor in the Office of Management and Budget found one anyway.

A recent federal audit determined that the state of Washington’s 20-year-old system of paying for mental health services – which federal regulators approved – violates current U.S. procurement laws.

And the feds want a plan to change the system within 90 days. The state attorney general and the Department of Social and Health services plan to appeal the audit ruling, and we hope they succeed.

While this seems like a mundane accounting issue, it will have a real-life effect on providers of mental health services, such as Olympia-based Behavioral Health Resources . In the worst-case outcome of the audit ruling, thousands of mentally ill people in the South Sound could be denied needed care.

With the blessing of the U.S. Center for Medicare and Medicaid Services, the state built a mental-health delivery system managed under contract by Regional Support Networks. Thurston County acts as the local RSN, as county governments do in all but Pierce. The counties then contract with providers to provide mental-health services, as Thurston and Grays Harbor do with BHR.

The federal audit finding found fault with the state’s system of capped payments to the counties. They want the state to limit payments to “allowable costs.” In the alternative, they want the state to open up its contracts for Regional Support Networks to a competitive bid process.

Either method throws a smooth-running system developed during two decades into chaos. Before harming the state’s system, and the people it serves, the federal government should have resolved its own conflicting directives.

While the impact of the change on providers is unknown, this ruling undermines a key element of the state’s current system: Local governments share the financial risk with the state that come with the care of the chronically mentally ill.

According to BHR CEO John Masterson, “(Counties) are far better able to know how to mitigate that (risk) because of their management of local housing programs, the local criminal justice system and more, because they are the first to learn of citizen and business concerns about care of the mentally ill. The (counties) also partner with local agencies and private groups to extend the impact of the state’s investment in community mental health care.”

It’s counterproductive when one federal agency (OMB) changes its rules and forces another agency (CMS) to apply them after the fact.

Federal regulators have been signing off on the state’s county-based mental health system since 1993. To dismantle it now because two federal agencies have conflicting rules seems careless and irresponsible.

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