A New Path for Mental Health

RALEIGH – In 2001, North Carolina embarked on a comprehensive reform of the state’s mental health system. The reform was needed and had the best of intentions. It reflected the latest research and policy ideas about how to create incentives for cost-effective treatment of mental illness and substance abuse.

And as we all now know, it went badly awry.

There were flaws in both the design and the management of the reform strategy. It prove challenging, to say the least, to convert county-run programs and provider cartels into multi-county local management entities (LMEs) to purchase services on behalf of patients. Some LMEs were disastrously run. Others had, at best, mediocre results.

But one, Piedmont Behavioral Healthcare, became a success story. Operating under a special Medicaid waiver, PBH posted better-than-average outcomes at a lower-than-average cost for patients in Union, Stanly, Cabarrus, Rowan, and Davidson counties. State officials and policy analysts noticed the difference, and began to consider how best to replicate PBH’s success elsewhere in North Carolina.

In the John Locke Foundation’s Agenda 2010 briefing book, JLF’s Joe Coletti proposed that the state seek federal Medicaid waivers to allow more North Carolina LME’s to adopt the best practices of PBH. Coletti also urged policymakers to reconsider the current assortment and geographic coverage of LMEs. Now Gov. Beverly Perdue has signed a new bill into law that would do precisely these two things.

As the Winston-Salem Journal reported on Monday:

The primary goal of the waiver program is combining the management of Medicaid and state funds at the community level to reduce costs and add more accountability and consistency to mental-health reform. It essentially puts fewer restrictions on how LMEs manage the providers and services they oversee.

The state has an Aug. 1 deadline for selecting the LMEs that meet the waiver criteria.

By all indications, the Obama administration will look favorably on North Carolina’s waiver requests. We are hardly the only state grappling with the problem of reconciling demands for mental-health services with the management and fiscal capacity of state and local governments. Expect to see more waiver requests in the future, as governments try new approaches and learn from each other’s successes and failures.

For fiscal conservatives, it’s worth pondering for a moment why state involvement in mental health is appropriate in the first place. Although most treatment of mild-to-moderate mental illness and substance abuse occurs through traditional networks of private providers and insurers, some individuals have such severe maladies that their very ability to recognize and seek treatment for their conditions is impaired.

Family members and friends should be the first resort in seeing that these patients receive necessary services. But sometimes a lack of familiar or financial resources leads to untreated diseases or addictions that, in turn, impose costs on taxpayers in a variety of ways. Many of those arrested for disorderly conduct or criminal acts suffer from some form of mental illness, for example. Homelessness, child abuse and neglect, and spousal abuse are also often associated with mental illness or substance abuse.

Inevitably, state government is going to be in the business of financing mental-health interventions for some North Carolinians, either because they have entered state custody or because they are likely to do so in the future. It is in the best interest of taxpayers to ensure that these interventions are timely and cost-effective.

The new LME waiver process offers great promise. We hope all that Piedmont Behavioral Healthcare’s successes can be replicated across the state. But as was the case for the 2001 reforms, good intentions are insufficient. The Perdue administration needs to manage the process carefully.

Hood is president of the John Locke Foundation.