NAMI NORTH CAROLINA RESPONSE TO THE STATE AUDITOR/PCG REPORT ON PSYCHIATRIC HOSPITALS AND AREA MENTAL HEALTH PROGRAMS

This document is a response to the recommendations contained in the State Auditor and PCG study of the state psychiatric hospitals and area mental health programs. The recommendations contained in the executive summary of the report have been regrouped by topic area. The recommendations are reproduced verbatim and are numbered from the executive summary. Numbers in parenthesis refer to the page number the recommendation appears on in the executive summary. A copy of the executive summary and full report can be found at:
      http://www.osa.state.nc.us/perform/pareport/per-0184.pdf

The proposed County Program model will shift management responsibility for mental health, developmental disabilities, and substance abuse services to North Carolina’s counties. Within this system, groups of counties may operate as partners. This model will improve services by broadening revenue streams, mandating and supporting more consistent service packages, and re-engineering the business and governance relationships between State agencies, counties, providers, and the local mental health service delivery mechanism. It will help to re-establish trust and confidence in the system.

1. Responsibility for providing mental health and substance abuse services at the local level should be shifted from Area Programs to County Programs. (p.6)

Counties will assume the management responsibility for these services, at their option, and under contract with the State. The service system will become a part of a strong governmental structure with management capability. The new entities will be known as County MH/DD/SAS Programs, referred to here as County Programs.

2.Counties, acting within State guidelines, should choose their own county partners. (p.6) Partnerships among counties will be entered into freely. Partnership boundaries should be determined locally so that they can be politically viable. State standards for County Programs will require sufficient financial, service, and management capacity. The resultant number of county partnerships is expected to be substantially smaller than the current number of 39 Area Programs.

NAMI NC Response: While NAMI North Carolina recognizes that these recommendations seek to clarify responsibility and strengthen accountability, moving responsibility to county government raises many concerns. North Carolina county government does not have a strong history of involvement in mental health services, particularly in multi-county area programs. There is tremendous ignorance and stigma that surround mental illness and support for treatment services has not been a priority. Support for mental health services has stayed the same or actually decreased for most counties. While county government can provide a strong management capability, our concern is whether county leaders have the background to provide the fiscal and programmatic commitment to ensure success.

The state must take an active role to establish strong criteria that encourage counties to partner within parameters that will strengthen the care system. A major problem identified in the current system is disproportionate overhead due to the multiplicity of area programs. If counties are left simply to choose partners, without any guidelines or parameters, the tendency will be to choose arrangements that are familiar. The state then will run the risk of ending up with just as many programs as there are currently. The state could establish criteria such as a maximum number of programs as an end result of partnering (e.g. 10-12) or require programs to cover a minimum number of lives (e.g. 500,000 lives). Other criteria that should be considered and demonstrated in any partnering arrangement are management capacity, history of working together, and plans for ensuring services to the entire service area.

If a reduction in the number of area programs occurs, steps must be taken to ensure that problems faced by current multi-county programs do not continue in this new system. For example, it currently is difficult to generate commitment/responsibility by county commissioners in multi-county programs. While new boards will be created to strengthen county government involvement/management, this new board of county representatives and managers, while strong in fiscal management, will probably not have the expertise to ensure that services to people are consistent in access and quality across the counties. The contracts that this county board will make with service providers and managers will require monitoring not only by the state, but should include the active involvement of the citizen boards in monitoring how services are provided. These citizen boards should report to the new county boards and directly to the county commissioners.

NAMI North Carolina is concerned that little attention has been paid to the revisions that will be necessary in current statute to achieve the stated goals of clarifying authority and responsibility. Revisions in statute cannot be done piecemeal or as an afterthought. A total review and revision will be necessary and should be done with the assistance of those familiar with both state and federal (Medicaid) law.

 

PCG Area Program Recommendations

3. Area Programs should no longer exist as local political subdivisions of the State. (p.7) Counties might call upon current Area Program staff and board members to assist during the transition phase. Existing Area Programs might become part of new systems, but would then act under the direction of county government. Staff and assets of Area Programs might also become part of new service systems. Alternatively, current Area Programs might choose to restructure themselves as private non-profit 501(c)3 corporations, in order to provide management services or direct services to clients.

NAMI NC Response: The PCG report details the glaring disparity in access and quality of care across the system. Another major problem in the current system is the lack of capacity and expertise to provide many management functions. This recommendation could be viewed as supporting the status quo. Care must be taken not to simply continue the current system under a different name. As area programs cease to be political subdivisions of the state, efforts must be made to encourage diversification of service providers. While it is important to provide continuity of service provision during the transition, reform can’t truly happen until there are true choices of providers. If area programs are provided with support and assets to continue, competition is not a level playing field.

A great deal of clarification needs to occur with respect to what management services might be provided by area programs. Criteria for the capacity to provide such services need to be established regardless of who is providing management services.

PCG Recommendation

4. Area Boards should be replaced by County Program Boards with Advisory Committees (p.7). The new County Program Boards will make recommendations to the County Commissioners on the mental health, developmental disabilities, and substance abuse annual plan and budget. The boards will have 5 to 7 members, including at least one Commissioner from each participating County. Larger multi-county programs may have larger boards. Each board will have three advisory committees, one each for mental health, substance abuse and developmental disabilities, to ensure that the views and concerns of consumers, family members, and advocates are heard in county government.

NAMI NC Response: We are well aware of the limitations of the current area board structure and recognize that changes are needed. Consumers and family members have tremendous expertise on the services necessary to support people with mental illness and the quality elements that must be in place. Families and consumers have a strong role to play in client rights issues.

While the disability specific committees will provide a focus for concerns, they will, as with the current board structure, only be as strong as the individuals appointed and the willingness of leaders to listen. The recommendation does not specify how individuals will be appointed. Too often individuals are appointed to support the current leadership instead of to represent a constituency. We believe that citizen advocacy organizations should appoint a significant number of members to the disability specific committees. These organizations are generally comprised of consumers and family members and, as organizations, have made a commitment to represent and work on behalf of their constituent members.

The advisory nature of these committees is of concern and steps should be taken to strengthen their authority. We recommend that these committees be charged with developing a disability specific plan for consideration by the county board as part of the plan that must be submitted as part of the contract with the state. A formal endorsement of the final plan by these committees prior to submission to the state should be required. These committees should have a role in monitoring quality and receive reports from clients rights committees.

 

PCG Contract Recommendations

5. The county-State contracts should have built -in protections (p.7). By design, the State contracting system will ensure that State service standards and requirements are met; that the county has sufficient management control over financing; that consumer service needs are the focus of the County Program; and that all parties are protected in the process. The contracting process will not be price-competitive. Rather, the process and resultant contracts with the State will rest on detailed plans from proposed County Programs to demonstrate their willingness and capacity to provide services, manage finances, and meet State standards. It should guard against unfunded mandates.

8. Responsibilities for monitoring and managing the system of care should be clearly designated to the re-organized DMHSAS and the County Programs (p. 16). Specific recommendations designate the changes in roles of the Division and of the County Programs in the following domains: standards of care; utilization management; appeals/grievances; quality management; outcome evaluation; consumer satisfaction; clinical guidelines. This plan provides a comprehensive structure for managing the system of care with appropriate checks and balances at each level.

9. The current confusion among all parties concerning the specific role of Area Programs in the system needs to be clarified. Other than in certain parts of the system, Area Programs currently play varying administrative and service roles. It is necessary to establish in the new county-based system, County Programs as the "lead agency" on behalf of Medicaid and the State (p. 20). Some of these administrative tasks lie clearly in the centralized domain of DMA while other tasks could be the responsibility of DMHSAS, DDD or the County Programs. There are some tasks that could be the joint responsibility of the parties. During the implementation phase of the new system, DMHSAS, DDD and DMA will be responsible to finalize the specific scope of responsibility of County Programs prior to contract negotiation. A detailed contract or memorandum of understanding between DMHSAS, DDD, DMA and each County Program would be required to document the relationship, as well as the roles of DMA and DMH.

NAMI NC Response: The state-county contracts will be the linchpin of the success of this plan. The contracts as outlined are broader in scope and complexity than anything previously attempted. We are concerned that the expertise to develop these contracts is not currently available in state government. We strongly urge that the state and counties engage the services of individuals with experience developing this type of contract to provide the expertise necessary to ensure success.

 

PCG County Contribution Recommendations

6. The counties should be given incentives to increase their financial contributions over time (p.7). Interviews with county commissioners and managers during site visits suggest that new local funding must be accompanied by a high level of local accountability. Although some counties have not been inclined to allocate additional money for mental health services, many have indicated a willingness to contribute financially if they are assured that local citizens will be served.

12. PCG recommends increasing the financial participation of Counties through a minimum contribution level as the system migrates to a County-based operation (p. 20). Counties must be incentivized to increase both direct (cash) and indirect (in-kind services and facilities) participation.

2. DMHDDSAS should define target populations and the services required by those populations. It should establish a "matching process" for additional funding for new services (p. 19). All counties would be required to maintain their current level of funding and services for seriously and persistently mentally ill persons and for other target populations. Only new, expansion dollars would benefit from this matching process. The matching formula would provide incentives for all counties to participate and it should accommodate counties that are financially distressed. For example, the State might initially require a 20% cash contribution from counties, and a 10% match from those financially distressed.

4. A standard accounting of county contributions to mental health programs should be established (p. 19). This should include cash and non-cash contributions, such as building and space costs, transportation, and other in-kind local resources. Once this methodology has been developed, a floor should be established for cash and non-cash contributions. This new methodology would encourage aggregate use of county resources by the new County Programs.

14. There is a need to streamline the contract management process in order to decrease administrative costs, improve results, and decrease frustration levels (p. 20). Overall, the premise is the State setting standardized policies, procedures, and documentation while locally the County Programs are executing the processes in a coordinated fashion without unnecessary duplication of effort. The end result is lower administrative costs for both the County Programs and private providers.

10. A target should be established for maximum County Program administration costs (p. 20). Due to the expected variation in County Program size, the target should be a percentage of total expenses rather than a specific dollar figure.

7. The State should ensure service coverage for residents of all counties (p. 7). The State will play an active role in ensuring that all counties participate in becoming County Programs. As a last resort for counties that are unwilling or unable to participate in County Programs, the State will manage local services directly, charging those counties a fee for management services.

NAMI NC Response: We agree with the recommendations concerning accounting and streamlining administration. Reducing overhead costs so funds can be directed toward service should be a priority.

The current deficit of services is several hundred million dollars. Simply shifting management responsibility to counties will not eliminate that deficit. We are in great danger of establishing a huge unfunded mandate for the counties. The state should consider a minimum contribution from the counties. While incentives are preferable to encourage participation and support, the state needs to establish minimum participation levels and targets to increase participation over time. Incentives should be provided to reaching these targets.

There are some low-wealth counties that will have considerable difficulty participating and other counties that do not have the history nor desire to support mental health. The lack of participation, for whatever reason, should be viewed by the state as a lack of capacity or willingness to contract with the state to provide mental health services. The state should recognize, however, that increasing county contributions will not be sufficient to fund the needs of the system. The state has neglected its responsibility to provide adequate funding for services and a commitment must be made at the state level to provide the necessary funding.

Recommendation #6 references county willingness to provide new money if service accountability can be assured. This recommendation requires much more clarification. There have been instances where funds have been provided for politically popular programs while basic needs are not met, particularly for individuals with chronic mental illness. NAMI North Carolina believes that new money should be provided to fund services in the basic benefit package and for target populations in the county. This should be the priority and we believe this will provide the accountability commissioners are seeking. Only if the funding needs of the basic benefit package and target populations are met should counties be allowed to spend new funds on other mental health priorities.

 

PCG Transition and Training Recommendations

8. The process for assumption of county responsibility should ensure adequate time and resources (p.7).

Over a five-year transition process, counties will be given time and resources to make appropriate management and partnering decisions. The implementation planning and roll-out processes will be overseen by a special Blue Ribbon Legislative Implementation Commission.

7. In order to increase and maximize the amount of Medicare reimbursement in the mental health system, DMH should develop technical resources to assist County Programs. Currently, these skills are limited at both the community and State level. These resources need to assist County Programs with the technical aspects of establishing compliant programs and billing processes/requirements (p. 20).

10. DMHSAS should develop a Statewide training plan and resources to support the new service structure in the County Programs and the new role of the State hospitals (p. 16). This plan should identify core clinical competencies required to provide cost-effective essential clinical services across State facilities and Area Programs. These competencies should include: standard assessment and evaluation skills for all disability and age groups, crisis stabilization and ongoing treatment techniques and targeted treatments for special populations. Particular attention should be paid to children’s treatment, treatment for adults and children with co-occurring mental health and substance abuse disorders and in providing culturally sensitive treatment for minority populations, including the State’s rapidly growing Hispanic population.

NAMI NC Response: The state should provide the technical expertise to prepare counties for successful participation. Standards of readiness or competency should be established. Those counties with the greatest capacity and willingness should be encouraged to be the first in the roll-out so that others can learn from the experience.

 

PCG State Government Recommendations

9. A Division of Developmental Disabilities (DDD) should be established as a separate Division, independent of the restructured Division of Mental Health and Substance Abuse Services (DMHSAS) (p.7). This recommendation is discussed later in this report.

10. The new DMHSAS and DD structures should be designed to administer contracts with the counties and to manage the downsizing of the State hospitals (p.7). Each County Program will have a single contract with the Department of Health and Human Services (DHHS) to include mental health, developmental disability and substance abuse services. Both divisions will administer the contracts with County Programs. DMHSAS will manage the downsizing of the State hospitals and the transfer of hospital resources to the County Programs.

NAMI NC Response: A response to the separate DD Division is later in this document. If there is a separate Division, this recommendation will be important to help coordinate services at the local level. DMHSAS should be responsible for managing downsizing and transfer of hospital resources.

PCG Recommendation

11. The Secretary of Health and Human Services should implement changes in Medicaid administrative responsibilities that improve policy development and coordination (p.8). As director of the single State agency under contract with HCFA, the Secretary of DHHS should move a number of Medicaid functions to the DMH/SAS and DDD service agencies. These could include (a) coverage and reimbursement policies, (b) financial operations including rate setting, provider audits and budgets, (c) program integrity, (d) provider enrollment and provider relations, and (e) contract monitoring.

NAMI NC Response: Improving policy development and coordination is critical. Previous efforts to shift responsibilities to DMH have not been successful, primarily because the DMA retains responsibility for decisions about Medicaid that have been made by other agencies. While responsibility for initiating policy may be moved to DMH or DDD, DMA must be involved. Perhaps the Secretary can establish a high level council of Division Directors, chaired by the Secretary, to oversee Medicaid policy and coordination in MHSA and DDD.

 

PCG Recommendation

12. A Blue Ribbon Legislative Implementation Commission should be created to oversee the process and advise the Secretary of Health and Human Services (p.8). This commission will advise the Secretary on the transformation of the current system from an Area Program structure to a County Program structure; on the phase-down and reconstruction of the State Hospitals; and on the changes to be planned for DD services and regional centers.

NAMI NC Response: We strongly support this recommendation.

PCG Recommendation

13. A Mental Health and Substance Abuse Advisory Council and a Developmental Disabilities Advisory Council should be established (p.8). These councils will provide ongoing review and advice to the division directors on a wide range of topics, including the process of establishing the County Programs and monitoring the changes at the State schools and regional centers.

NAMI NC Response: We strongly support this recommendation. Members should be representatives of major advocacy groups as well as family members and consumers of services.

 

STATE HOSPITALS

PCG Recommendations concerning Historical Utilization and a Normative Model of Demand

1.North Carolina's State hospital bed capacity should be reduced by 667 beds (P. 10). This will reduce capacity from 2288 beds to 1621 beds. This will bring North Carolina's utilization rate to the average of the peer group states and within the local operating capacity of many well run Area Programs.

1. North Carolina should immediately begin the reduction of 667 beds from its State Hospitals (p. 24). This will create opportunities for transferring funds from State Hospitals to community-based operations.

2. This reduction should occur over the next five years to permit sufficient development time for the new County Programs (p.10). Beds should not be closed until resources are in place locally.

3. PCG projects target numbers for bed closure according to the geographic regions served by existing State hospitals (p.10). These projections should be viewed as the demand within existing regions.

No allocation is made to individual Counties or Area Programs.

Cherry region 333 beds

Umstead region 340 beds

Dix region 430 beds

Broughton region 518 beds
_______________________________

Total 1621 beds

2. The 1621 beds should be seen as a "floor" for beds serving the current population of the State hospitals (p.10). No specific user group has been eliminated. All have been reduced according to the best State practice models. When County Programs have developed local plans and budgets, there may be the further reductions in hospital bed numbers, and these may result in a user mix that is different than what is projected.

3. DMHDDDSAS should develop a financing process for moving funding from the State hospitals to County Programs (p. 19). The projected closing of 667 beds will save the State from $38 million to $51 million. These funds could be leveraged to purchase $71 million to $95 million counting all reimbursements to reduce State hospitalizations. This process should include at least four components:

· An opportunity for County Programs to develop detailed proposals that demonstrate their interest and ability to reduce use of State hospitals.

· Initial funding of those proposals by means of a State-managed "bridge fund" that would allow unspent hospital resources to be used for this purpose and to be carried over at year's end. State "bridge funds" would be available for two years.

· A hospital downsizing management program and accounting methodology that would

· A realistic and annually adjusted allocation of State hospital beds that would require County Programs to pay the full cost of overuse of State hospitals. This should be coordinated with the 667 bed reduction goal.

1.The three-hospital model should be adopted (p. 24). The three-hospital model provides significant financial benefits to North Carolina, by creating additional funding for community services. PCG believes that the differences between the three- or four-hospital models are more significant than is immediately apparent. Although the cost reduction projected for four hospitals is feasible and well-documented, achieving and maintaining this reduction would require continued and aggressive management at all four hospitals. The three-hospital model is more likely to achieve its financial goals.

1) The State should pursue a three-hospital model, closing the Dorothea Dix Hospital (p. 12). Hybrid construction and renovation would take place at Cherry and Umstead Hospitals. Broughton Hospital would be renovated. In addition to the accessibility issues and the renovation costs, there are a number of other reasons why the three-hospital model with the closing of the Dix is the most cost-effective and appropriate for the State:

· The Dorothea Dix Hospital is the most expensive hospital to operate. Its closure represents potential additional savings of $13.2 million annually. These savings would be transferred to the community for State hospital replacement services and financing of the basic benefit package. When leveraged with Medicaid and other revenue sources, the Dix closure is valued at $24.4 million annually. (Section 2.6)

· The area in which the Dorothea Dix Hospital is located offers good opportunities for the development of community-based services. The mental health programs of Wake and Durham Counties are particularly active. In addition, the medical schools and their teaching facilities and the community general hospitals in this region make the closure of Dix a more feasible choice.

· The location of Dorothea Dix Hospital in the Raleigh/Durham area makes it feasible to consider employment alternatives for staff. State hospitals in rural areas provide significant employment opportunities that are unduplicated in the community. Staff at the Dorothy Dix hospital have better access to employment in other State agencies or in the private sector.

· The "safety net" currently represented by the State hospitals can be maintained. The modernization of Broughton, Cherry and Umstead Hospitals, coupled with the State and local commitment to expanding community services, and the creation of the new Dorothea Dix Mental Health Transfer Account will support the "safety net." (See sections 2.5 and 2.6)

· Among the State hospitals, the Dix Hospital represents the richest opportunities for re-use. Multiple uses of the large campus are possible for the benefit of the mental health community and for the benefit of the State.

2) The State should commit to the following principles for the closure of the Dorothea Dix Hospital (p.12):

· The replacement beds in other hospital should be as good as, or better than, the ones to be eliminated.

· The replacement services in the community should be of high quality and accessible.

· The closing process should be planned carefully and managed closely.

· There should be clear accountability to the mental health community for the resources saved by the hospital closure.

3. The State should establish a special "Dorothea Dix Mental Health Transfer Account" that would account for all of the savings and revenue operations accrued from hospital downsizing (p. 24). All operational savings should be budgeted to this new fund before being allocated to County Programs. If revenue opportunities are created as a result of the closure of Dix, for example through lease agreements of the land or property, a portion of that money should be placed in the Transfer account. It will be crucial for the State agencies to regain the public's trust in its financial management of mental health resources. The Dorothea Dix Transfer Account will add an opportunity for public review and scrutiny of the process.

3) Additional analysis will be needed to determine the exact distribution of beds and services at the three hospitals under the County Program model (p.12). Determining the specific bed types and services that will be needed to meet regional demand within a three-hospital model should take into account the options for increased community-based services and their feasibility at the local level and Statewide.

1. The recently issued standard for assessment developed by DMHDDSAS should be adopted for Statewide use and incorporated as a condition of participation in the contracting process (p.15). Implementation of the standard should be monitored through the Council on Accreditation process or by periodic audits by State-contracted reviewers.

2. The development of a continuum of care for individuals with substance abuse and addictive disorders should be a top priority for DMHDDSAS and the State of North Carolina (p. 15). This process should begin with the development of acute care capacity at the ADATC’s and in community hospital settings. In addition, specialty programming and/or additional services for individuals with co-occurring disorders should be provided within current treatment settings because such a large portion of the traditional target population is affected. Providing intensive services for adolescents could head off the vicious downward spiral of addiction, and would be cost-effective in the long run.

3. DMHDDSAS should re-define the role of the State hospitals as intermediate and long term care facilities (p.15). A major part of this change requires a strategy for development of acute care capacity in community settings. Structures needed to accomplish this transition include: conversion of all ADATCs to acute care; development of partnerships such that Area Programs could use former State hospital buildings; development of innovative hospital alternative programs in the provider network; and partnerships with community hospitals and other intensive care providers. Some funding for these ventures should become available as the State hospitals serve fewer individuals. However, additional funding, especially start-up capital, will be needed. Additionally, DMHDDSAS and DMA should restructure inpatient bed rate-setting so as to optimize the use of community inpatient beds.

1.North Carolina should adopt a process of defining specific target populations and benefit packages that match the needs of the targeted group. Adults with serious mental illness, elderly and dual- diagnosed individuals currently residing in State hospitals should be priorities (p.15). Movement of these individuals will require the development of new community-based capacities and structured living environments. DMHDDSAS should immediately begin developing pilot programs to determine the optimal mix of services for this population. Pilot partnerships might include assertive community treatment providers, skilled nursing facilities, and residential service providers. These groups require special focus to implement the State hospital bed closure recommendations.

2. Preliminary review of the findings indicates that savings achieved under the three-hospital model might support the cost of the Basic Benefit Package without additional operating funds (p. 26). Capital funding, bridge funding, and DSH-replacement funding are still required. Funding of target populations may require additional funding once the system is better aligned under the County Board structure.

2. DMHDDSAS should define target populations and the services required by those populations. It should establish a "matching process" for additional funding for new services (p. 19). All counties would be required to maintain their current level of funding and services for seriously and persistently mentally ill persons and for other target populations. Only new, expansion dollars would benefit from this matching process. The matching formula would provide incentives for all counties to participate and it should accommodate counties that are financially distressed. For example, the State might initially require a 20% cash contribution from counties, and a 10% match from those financially distressed.

NAMI NC Response: This effort must begin immediately as it has profound implications on the success of supporting people in communities instead of institutions and in determining the amount of funding necessary to provide needed support. The preliminary cost findings concerning the basic benefit package must be carefully reviewed for accuracy. It is likely that the implementation of a basic benefit package will substantially increase usage, especially from individuals who have not previously received services through the public system. At the present time services are not available to accommodate the increased demand. Significant capital and bridge funding will be required. Further analysis needs to be made regarding financing if the four hospital model is pursued.

5. PCG recommends the development of a standard "Evaluation and Acute Care" benefit package available to every North Carolinian through any local program (p.15). This benefit package should provide a designated set of services, subject to Statewide criteria for medical necessity. These services are critical to managing the front door to the State hospitals and to providing acute care close to home. Specifics of assessment services, acute care services for mental health, and acute care services for substance abuse are included in the full report. PCG understands that many of these services exist in area programs, but some will require development. All will need to be structured specifically to meet benefit package requirements.

1. North Carolina should implement a standardized, affordable benefit for assessment and acute care services Statewide (p. 26). This will have a direct impact on the use of State Hospitals for short-term inpatient hospitalization and detoxification.

3. More work needs to be done to arrive at the true cost of the Basic Benefit Package, including actuarial analysis with standardized data sets (p. 26). The model presented in this analysis projects a reasonable cost of the proposed Basic Benefit Package, however, a more thorough investigation into the existing service system is required to determine the utilization and cost of these services and to determine the levels of services which already exist in the system.

1. DMHDDSAS should develop a financing process for new basic benefit packages that, over time, will allow access to services for all North Carolinians (p. 19). The financing process should acknowledge the actual costs of services, require full use of Medicaid and other third party resources, and clearly define the State's funding responsibility.

5. The Willie M. program should be re-evaluated to permit more flexibility to serve additional, newly defined groups within the current budget (p. 19).

8. PCG strongly recommends continuation of DMH’s Residential Treatment initiative for Children in DSS custody and the plan to maximize available financial resources for these services (p. 20).

6. North Carolina needs a new plan of action for caring for the psychological and emotional needs of children (p.16). In caring for children and the needs of their families, this plan will build on the experiences of Carolina Alternatives and the Willie M Program. It will establish accountability for effectiveness and clinical outcomes. More specific recommendations are:

· Develop local inter-agency partnerships for the care of children based on the concept of "joint total responsibility" for program outcomes. These programs should be supported by the respective State agencies. Funding allocated by the legislature for that specific purpose would be an incentive.

· Expand the Willie M. program by adding new target populations to be served under that administrative umbrella. Using the 20% annual turnover rate, the populations served can be slowly increased without increasing the budget.

· Continue to develop alternatives to hospitalization and long-term residential placement. Alternatives include: expansion of model programs for emergency assessment and crisis intervention; crisis respite; home-based family treatment; and school-based intervention.

· Promote early identification and intervention for children at risk for severe emotional disturbance, sexual offenses, and substance abuse.

The target group should expand beyond violent youth. Willie M. should continue to target high-need children who require creative, flexible programming and funding. We should not assume, however, that additional funding will not be needed. As the program is expanded to additional target populations, with equally high needs, demand, and costs, may increase. The development of a continuum of care for children in our communities must be a priority. At present, treatment options for children with serious emotional disorders are very limited. We recommend targeted funding (bridge funding) to develop crisis services, respite, in-home, and school based services.

7. PCG recommends an annual review and modification of the benefit packages based on outcome evaluation data (p.16).

9. Consumers and families must be actively involved in leading the effort to manage and monitor the system at every level (p.16). The involvement required of consumers and their families includes but is not limited to: initial process design with DMHSAS; management input at the county level; quality management; serving on grievance and appeals committees; and serving on advisory groups for developing guidelines.

6. The State should pass a mental health parity law that builds upon the Mental Health Parity Act of 1996 (p. 19). It should allow County Programs and contracted providers to become preferred providers.

11. DMH must develop and implement a singular Unit Cost Reimbursement (UCR) system (p. 20). The current Pioneer system is outdated and ineffective while the Willie M and Thomas S systems create additional administrative requirements. The system needs to include consistent service definitions across all funding sources and client-specific reporting.

13. In order to improve private providers’ financial stability and cash flow, the State should enroll private providers directly with Medicaid, removing Area Programs as financial intermediaries (p. 20). This would decrease County Program administrative costs through eliminating duplicated efforts. Private providers would use their own Medicaid provider numbers to submit claims.

15. The State should standardize the private provider accreditation process and require County Programs to either internally accredit private providers located within their own catchment areas or use the results of the COA process more effectively without adding a duplicative administrative effort (p. 20).

16. Standard intake protocols should be implemented across all County Programs (p. 21). Financial information gathered during the intake process is extremely important in maximizing County Program revenue.

17. We recommend that DMH establish a unit to oversee the County Programs’ financial performance and provide guidance (p. 20). In the Governance and Structure section of this report, PCG has recommended that this responsibility lie within the newly established Office of County Programs (OCP).

Based on the factors described in the report and on analysis against the criteria, PCG recommends that the Secretary of Health and Human Services create a separate Division of Developmental Disabilities. It is extremely doubtful that the State, acting under the current structure, would be able to develop the necessary resources, leadership, and momentum to meet the growing challenges and provide for the needs of persons with developmental disabilities and their families. It is important to emphasize that this recommendation is for reconfiguration at the State level only (p. 35).

· Preparation of a new DD plan that implements the PCG recommendations for the new County Programs.

· An organizational and staffing plan for the new division of developmental disabilities that demonstrates: (a) the administrative cost and source of funds for the new organization; (b) an organizational structure designed to administer the County Program contract and to provide adequate oversight and technical assistance; and (c) the ability to work effectively with the new DMHSAS Division, under the auspices of the Blue Ribbon Implementation Commission and the Secretary of the Department of Health and Human Services.