RALEIGH — State mental health officials rolled out new requirements Friday aimed at strengthening North Carolina's struggling mental health system and imposing stability after nearly a decade of failed reform efforts.

Just don't suggest they are trying to reform the reforms.

"Reform is over," declared Lanier Cansler, the secretary of health and human services. "Now we are about building a mental health system and doing the things that we need to do to build a strong system across the state."

The initiatives showcased Friday, which have been in the works for more than a year, went into effect Jan. 1. They include rules for private companies receiving state and federal money for treating people with mental illness, developmental disabilities or a history of substance abuse.

To be certified as a new Critical Access Behavioral Health Agency, companies must provide at least five core treatment services and have staff that meet certain requirements. As a result, many smaller treatment providers don't qualify and will be forced to merge or go out of business.

Of the 603 applications filed by companies seeking certification under the new standards, known by the acronym CABHA, 175 have been approved by the state.

Dr. Beth Melcher, the director of the state mental health system, said Friday that each of North Carolina's 100 counties will have access to a CABHA certified provider. Though that does not mean there will be a physical treatment office in each county. In some cases, especially in rural areas, those providing services will travel to meet patients at their homes, Melcher said.

The 2001 reforms

The new service requirements replace the state's troubled Community Support Program, part of a sweeping reform plan approved by legislators in 2001. The state closed local government-run mental health programs and downsized state mental hospitals in favor of a system that would pay for private companies to treat people with mental illness in the communities where they live.

But the reform plan had some crippling flaws. To encourage private providers to participate, certification requirements were set so low people with little or no experience treating individuals with mental illness went into business.

Hourly reimbursement rates for low-cost "mentoring services" by employees with little more qualification than high school were set at the same level as intense therapy services provided by personnel with advanced degrees.

The lax requirements made North Carolina a national magnet for Medicaid fraudsters.

A 2008 review by The News & Observer found more than $400 million was wasted on services that were either not needed or never occurred. A subsequent state audit put the figure at more than $500 million. The state's response was to slash reimbursement rates, causing many high-quality service providers to go bankrupt and experienced psychiatrists to leave for other states.

Meanwhile, those in need have sometimes gone without effective therapy, and people in crisis have often been left to languish for days in emergency rooms because of a shortage of in-patient treatment beds. Levels of violence in the shrinking state system of mental hospitals rose as the downsized facilities were initiated with increasingly sick and desperate people.

"We have gone through a number of years, since mental health reform started some years ago, of somewhat of an unstable situation, lack of access in many areas, a reform that has not worked as originally intended," Cansler said Friday. "We have seen in past years headlines about hundreds of millions of dollars being wasted in the mental health system, which means we have dollars that could have been spent to provide a benefit that weren't spent that way."

michael.biesecker@newsobserver.com or 919-829-4698