State ends ties to West Michigan mental-health agency for poor and disabled

The state is ending a contract with a regional agency that coordinates behavioral health care for roughly 30,000 poor or disabled patients in West Michigan. A Michigan mental-health industry official said he doubts the change will negatively impact care for that patient population.

Pointing to a history of debt and financial trouble, the state is cancelling its contract with a regional agency that coordinates behavioral health care for roughly 30,000 poor or disabled West Michigan residents.

The Michigan Department of Health and Human Services had put Lakeshore Regional Entity on notice in April, saying its “instability puts the health and safety of (its) beneficiaries at risk.”

It cited fiscal problems dating back years, including a deficit of nearly $24 million in 2017 that exhausted its reserves forcing the state to cover about $7 million in over-spending. Lakeshore had losses pegged at $16 million in 2018 and was projected to lose $16 million in 2019, according to MDHHS.

In a statement issued Friday, MDHHS Director Robert Gordon said: “Following many years of poor performance and financial mismanagement…we believe it is clear that LRE is not the right entity to deliver services for West Michigan residents in need.”

Prior coverage: Mounting debt threatens West Michigan Medicaid mental-health agency 

Lakeshore’s contract will be temporarily turned over to Beacon Health Options, a Boston-based private firm it contracted with in 2018 to assume day-to-day managed care responsibilities.

Lakeshore is one of 10 regional agencies in Michigan that coordinate care for Medicaid mental health and substance abuse services and care for the disabled. It serves residents in Allegan, Ottawa, Kent, Muskegon, Oceana, Mason and Lake counties, with day-to-day care within the region furnished by five Community Mental Health agencies.

Lakeshore received about $250 million in Medicaid funds in 2018.

The MDHHS statement said that it would establish a new regional agency to manage care for the area, “building on recent work there with Beacon Health Options.”

Mark Reinstein of the Mental Health Association in Michigan: “For the first time, the state has said you just can’t do a really poor job and expect to get money from that.”

Mark Reinstein of the Mental Health Association in Michigan told Bridge Magazine that Lakeshore’s performance left the state little choice.

“Some people are going to see this as the end of the world. I don’t. For the first time, the state has said you just can’t do a really poor job and expect to get money from that.”

Reinstein said he doubts the switch in Medicaid management will make much difference in patient care.

“I don’t think this will have a negative impact. Will it improve things on the street and communities that are part of that region? I can’t say that’s going to happen.”

Lakeshore officials have maintained its fiscal woes are symptomatic of what’s happening elsewhere in the state.

Lakeshore chairman Stanley Stek shared with Bridge a funding document that showed nine regional agencies in Michigan had operating deficits in fiscal 2018 that collectively exceeded $100 million, with nearly $40 million in overall deficits projected for fiscal 2019. Stek confirmed in April that Lakeshore’s fund reserves were exhausted.

Stek called the move to pull the plug on Lakeshore ““totally ill-advised and short sighted.”

Robert Sheehan, CEO of the Community Mental Health Association of Michigan estimated that Michigan’s $2.5 billion in annual Medicaid behavioral health funding is about $120 million short of where it needs to be.

Robert Sheehan, CEO of the Community Mental Health Association of Michigan: “We think it’s a mistake. You lose all oversight.”

“Medicaid payments are determined by actuaries and they tend not to trend very closely to actual demand. The rates have to be adjusted to reflect real demand,” he said.

Sheehan pointed to funding troubles in places like Macomb County, which saw its behavioral health funding drop from more than $208 million in 2015 to about $170 million in 2018.

In Kent County, network180, the community mental health authority, anticipated $104 million from Medicaid patients but came in more than $9 million short in fiscal 2017. It consequently cut services and slashed 17 positions from its staff of 200. Network180 also threatened to close Sheldon House, a Grand Rapids “clubhouse” mental health program, though that program was spared after receiving last-minute foundation support.

Kent County officials attributed its deficit to shifts by some clients from Medicaid to Michigan’s Healthy Michigan plan, which expanded health care coverage to those making up to 138 percent of the poverty level.

Even though MDHHS said it would establish a public board to oversee Beacon Health Options, Sheehan said he’s troubled by giving managed care responsibility in West Michigan to a private firm.

“We think it’s a mistake,” Sheehan said. “You lose all local oversight.”

Michigan Health Watch is made possible by generous financial support from the Michigan Health Endowment Fund, the Michigan Association of Health Plans, and the Michigan Health and Hospital Association. The monthly mental health special report is made possible by generous financial support of the Ethel & James Flinn Foundation. Please visit the Michigan Health Watch 'About' page for more information.

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Bonnie Zimmerman
Mon, 07/01/2019 - 2:18pm

I don't know where this leaves patients with Lyme disease as MI already has the hard push of not treating pain

Mon, 07/01/2019 - 4:29pm

Say it ain't so, those in an agency that were to be fiscally responsible were actually help accountable.
What is disappoint is that Mr. Sheehan and his organization, CEO of Mental Health Association of Michigan, aren't offering ideas of how to prevent such a situation arising elsewhere in Michigan. It gives the impression that Mr. Sheehan and his organization have no respect for those whose money is being spent, talking only about more money and nothing about accountability. It is this projected attitude that lessens the credibility of his organization and those receiving state funds for their services.

middle of the mit
Tue, 07/02/2019 - 3:32am

Once again you are giving the State credit for holding a private contractor responsible, but then put the blame on the State. How?

["What is disappoint is that Mr. Sheehan and his organization, CEO of Mental Health Association of Michigan, aren't offering ideas of how to prevent such a situation arising elsewhere in Michigan. "]

The State only oversees. Do you understand that? The private employer, much like Aramark, tries to and then FAILS TO LIVE UP TO SAID CONTRACT and then the State says see ya! And somehow that is still the States fault in your conservative eyes?

Could you tell me if this logic works with anyone you have a private contract with? Please!!! Try this with your cable company and let us know the results!!

There is no hope for you.

Paul Jordan
Tue, 07/02/2019 - 10:01am

Please see my comment.
The state's gradual distancing itself from responsibility for mental health care is one example of how anti-government Republicans work to erode the value of government services. (Sound familiar? You might recall Grover Norquist, Jr., saying that he wanted to weaken government to the point where he could drag it into the bathtub and drown it.)
Contracting is a device that is vital to doing this. If one contractor proves inadequate (probably due to an inadequate level of funding), there will always be another willing to pick it up on the promise of making a profit. Like Pontius Pilate, the state can wash its hands--after all, it's the contractor's fault!

PS: If you really had the courage of your convictions, "middle of the mitt", you would post under your own name.

Thu, 07/04/2019 - 3:57pm

Contracting for services is a practical and judicious way to place people with specialized skills to perform services the contracting organization does not possess or does nat have an effective means of ensuring cost effective delivery of the services.
The comparison the State to 'Pontius Pilot' is very disappointing where he abdicate responsibility, the State is exercising their contractual responsibilities when the other party failed to deliver what they had contracted to do. You may not like what happened, by trying to justify your view by making an emotional appeal is disappointing.
As for 'middle of the mitt', I want to hear the perspective and it really doesn't matter the source, as for my name I have posted it on Bridge with a picture, it in formally on file with The Center for Michigan, and if you can make a case of why it matters [since I am not nor have ever been nor will run for public office so you will have a hard sell].

Thu, 07/04/2019 - 3:43pm

I was offering a bit of sarcasm on the State ending the contract for service, but I am glad to see them taking such action and encourage them to hold other contractors available. I have reread my comment and I find nowhere my blaming the state or others, though I did notice omitting the word Community when mentioning the CEO of the CMHAM and for that I was in error and apologize for.
My only other comment was direct toward the CEO of CMHAM and his employer was for their lack of recommendations of how/what to use to improve the accountability by the State for mental health service. From my understand, CMHAM and their members provide community mental health services and would seem to have an 'expertise' in the area and I would suspect have some proven practice they use internally to ensure people are being held accountable and the services are conforming to the contracts. As for the comment you quote, that is what it says I am disappointed for a missed opportunity, but there is no blame because he did no harm, he didn't fail to deliver on any agreed to service, he was not under any contract to present a means of hold his organization or other accountable.
The one that pays for service under a contract should always should include a clause in the contract that allows for termination of a contract for failure to deliver expect and contracted for services.
I am a strong support of contracting services, I have found that if managed properly is ensures there is a clear understanding of purpose and of practices, and affords the simplest of ways to keep the most effective providers of such service in place and serving. I have had the been part of terming contracts in the middle of a project with all that entailed, it can be challenging but the results justified it. I have also be involved with working with contractors to change their practices to keep working under the contract and that prove very effective, but in such a case the service contractor had recognize that the contract would be terminated, they were being held accountable.
As for your cable company, I have heard that ROKU is a viable alternative to a cable TV contract.

Paul Jordan
Tue, 07/02/2019 - 9:54am

Members of my family worked in Michigan's public mental health system from 1938 to 2005. At the beginning, the state not only paid for public mental health services but, for the most part, paid for them. It had a direct responsibility for the entire system of care, not just for controlling the system.
The termination of the state's contract with the Lakeshore Regional Entity is the direct consequence of gradual changes that have reduced the state's responsibility for ensuring that the services provided are sufficient to actually meet the need for them.
Beginning in the Engler administration, the state began to reduce its involvement in direct care by shifting most responsibilities to local community mental health agencies while firmly retaining financial authority and the power to tell these agencies what to do. To reduce reliance on the state's general fund, the state made CMHs dependent upon Medicaid reimbursement (which is 50% federally funded). This reduced the state's share of CMH funding from 90% to around 45%. ('Savings' like these were used to justify reducing state income tax rates.)
Over the years, the state has been following the same strategy with CMHs--now regional mental health authorities--as they have with traditional public schools. It retains control of what they must do and control of the money that they have to do it, all without any acknowledgement of a responsibility for ensuring that the funding is sufficient to meet the state's goals.
Now, perhaps Lakeshore is incompetently managed--I frankly don't know. The article demonstrates, however, that there are many mental health entities in the same boat. There clearly is a general lack of adequate funding for public mental health services AND no acceptance of responsibility for this by the state.

Fri, 07/05/2019 - 8:06am

I have worked in mental health for 35 years both as a state employee (partly during those destructive Engeler years) and agree with your comments. It is a travesty what the Republican Party has done to mental health services in this state.