Contractor fights for screening job

Some legislators want the state to resume screening mental health patients

A private company with a pivotal job in North Carolina's mental health system is fighting to keep its contract in the face of steady criticism and a move to diminish its role.

Although most government contractors work far from the spotlight, ValueOptions has drawn attention for its key role in the state mental health system -- screening thousands of requests for community-based treatment for Medicaid patients.

The decision to outsource screening patients and approving care was controversial. It was made over the objections of local mental health offices, which wanted to keep performing those tasks. After seeing millions of dollars wasted on questionable treatment, legislators now say it is time to return control to public agencies.

A special provision in the state budget requires the state Department of Health and Human Services to come up with a plan by early next year to return the screening job to local mental health offices. By July 2009, legislators want local mental health offices that oversee a geographic area covering 30 percent of the state's population to regain the power to screen treatment for Medicaid patients.

Since ValueOptions started that work about two years ago, the company has been the target of harsh criticism and at least one lawsuit.

ValueOptions drew fire from providers, local mental health offices, patients and at least one District Court judge for not approving requests for care quickly enough. A state official citicized the company for approving every request.

Though key legislators are looking to phase out ValueOptions, there's still a chance that the company can keep working. Its representatives argue that ValueOptions should stay on the job.

Will Woodell, a ValueOptions vice president for its public sector work, said the early problems were not the company's fault. He said ValueOptions got a shock when it took over in mid-2006 and received more than 173,000 requests for services in a year, when the state said to expect 50,000. The company is now doing the job the way the state wants, he said.

A flood of requests

"The volume was coming in three-fold from the beginning," Woodell said. "It took us a year to triple the number of staff -- to get our hands around the volume. As we did that, the rate of reductions and denials increased."

ValueOptions screens providers' requests to treat patients, denies requests for services patients don't need, and recommends alternatives when providers want to offer treatments that won't improve their patients' mental health.

But a report to legislators last month said that ValueOptions approved all requests for new services in its first five months on the job. A separate state audit criticized the state Department of Health and Human Services for not doing enough planning before giving ValueOptions the job and for monitoring the company's work inadequately. The company, which is based in Virginia and has offices in Morrisville and Charlotte, has a contract worth $57.2 million over five years.

As ValueOptions was taking over the screening job, private companies were rushing to provide a lucrative service called community support, which could be delivered by low-wage workers without college degrees. State officials did not have a good estimate on how much community support would cost. But the bills startled them. From March 2006 through January 2008, community support cost nearly $1.4 billion, 90 percent of the spending on new community mental health services.

ValueOptions shouldered some of the blame for the high costs.