Managed care failed, now rebuild N.C.’s mental health care system

Cardinal Innovations Healthcare Solutions handles government-funded behavioral health services for 20 counties, including Mecklenburg.
Cardinal Innovations Healthcare Solutions handles government-funded behavioral health services for 20 counties, including Mecklenburg. mhames@charlotteobserver.com

Richard Topping, the former CEO of Cardinal Innovations, once introduced himself to a colleague of mine as the Darth Vader of health care. Was anyone paying attention? Topping has been ousted as CEO of Cardinal – with a severance package of $1.7 million. We should be careful of what privatization can do with resources intended for the most vulnerable residents – those funds are too easily misdirected for personal gain, especially without effective oversight.

North Carolina had a good community mental health system, built in the 1970s and 1980s as a product of a progressive movement in the state. Every county had its own mental health center, or joined forces with neighboring counties. Brick and mortar buildings served anyone who needed help. The community mental health centers were part of one public mental health system. They could share information with each other and with the state psychiatric hospitals and UNC Hospitals.

In 2001, the blueprint for mental health reform called for the area programs, the administrative bodies over the community mental health centers, to divest services. The rationale was that these public entities could do better if they separated the funding of services from the delivery of services. This idea set the state on a path to privatization.

As the reform plan rolled out in the mid-2000s, area mental health centers had to dismantle their programs or find private companies to take them over. That was the moment the system shattered. Private providers sprang up and found they could make money – through fraud. The News & Observer ran a series exposing this fraud. In response, the N.C. General Assembly eliminated a key service that had been designed to support people who live with severe mental illness – community support – but had been abused as a cash cow for agencies serving anyone with Medicaid, especially youth.

Out of this Wild West approach to privatization, in which anyone could create a new mental health business, the solution appeared: managed care. Piedmont Behavioral Health had piloted managed care in a central region of the state and lobbied the General Assembly to adopt its model for statewide expansion. State leaders enthusiastically embraced the model but neglected to set the guidelines and controls needed to ensure good stewardship of public funds.

PBH became Cardinal Innovations Healthcare Solutions and set out to become the biggest and most powerful behavioral health managed care organization in the state, taking over smaller MCOs and amassing large financial reserves. These savings were supposed to be reinvested in innovative new services. Cardinal Innovations followed a corporate model – requiring its employees to sign nondisclosure agreements and offering high salaries to executives. It invested in marketing campaigns, a new building for its headquarters, lavish parties and explored new lines of business.

Meanwhile, our hospital emergency rooms overflowed with people who needed behavioral health services.

Here’s what managed care does: It makes it harder to get care. It sets up hoops for providers to jump through, first to become a provider in a closed network, and then to complete the paperwork needed to get authorizations for services. Cardinal Innovations wielded considerable power – it controlled the flow of funding to treatment and service providers.

Frontline mental health workers – the people who actually deliver mental health care – saw their salaries go down. Many lost benefits and job security. The first workers to be let go in the streamlined private agencies were clinical supervisors – experienced psychologists, clinical social workers and psychotherapists who trained new workers and provided ongoing supervision. The drive for productivity in the private agencies is relentless; it’s the only way to make the business model work.

Unlike the community mental health system, which served all comers, the new system is only for Medicaid recipients, with paltry funding for those with no insurance. It’s not easy to get Medicaid, especially in a state that did not accept the expansion under the Affordable Care Act. Many with great need are left out entirely.

So what’s next? Gov. Roy Cooper, the Department of Health and Human Services and the General Assembly have a responsibility to do right by our most vulnerable residents, and by taxpayers. We have considerable expertise in this state around best practices in behavioral health. Let’s hope that in the aftermath of the unraveling of Cardinal Innovations, we can rebuild a behavioral health system that is truly person-centered, is integrated with the broader health system, and is guided by proper oversight of public resources. The private sector does many things well – but is it the right vehicle for providing care to our vulnerable citizens?

Barbara B. Smith, MSW, LCSW, is a clinical social worker in Durham and an advocate for people who live with serious mental illness.