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The first step in a plan to turn control of Michigan’s $2.6 billion mental health budget over to privately owned insurance companies is poised for inclusion in next year’s state budget, despite a wall of opposition from mental health providers, patients and families across Michigan.

The contentious plan is embedded in two provisions of the state budget for the Department of Health and Human Services, part of the Omnibus Budget bill approved by the state House on Tuesday expected to be approved by the state Senate on Thursday.

The provisions include the long-term goal of privatizing behavioral health services for 350,000 Michigan residents with mental illness, substance use disorders, or intellectual or developmental disabilities. The plan would begin with four pilot projects as early as Oct. 1.

The pilots would allow health plans that have contracts with Michigan’s Medicaid program to provide behavioral health services, integrated with the physical health services they already provide. The 10 regional public bodies that currently control state behavioral health funds — distributing the money to local agencies and Community Mental Health organizations as they think best — would be reduced to four, and eventually eliminated if the system is privatized statewide.

Legislative supporters say the plan will save money by keeping patients healthier and out of emergency rooms, and by reducing administrative costs. Opponents argue that insurance companies have little experience with behavioral issues, and could try to cut corners to the detriment of patients.

State Sen. Mike Shirkey, R-Clarklake, chairman of the Senate Health Policy Committee and one of the plan’s top proponents, said Michigan needs to spend more on behavioral health services, but without increasing the strain on the state budget. This plan will save money on administration and physical health that can be used to beef up behavioral health services, he explained.

“We’re having to spend more money globally (on behavioral health), so we have to spend the money we’re currently spending better,” Shirkey said, adding the opioid epidemic has increased the demand for mental health and substance use treatment across the state.

“The goal isn’t to save money, period. The goal is to redirect money to more the behavioral/mental health side, and the only way to do that is to find those kind of savings on the physical health side, not bring in more money globally.”

Shirkey said integrating physical and behavioral health services will keep patients healthier and cut down on emergency room visits for avoidable problems, such as when patients stop taking their medication. The potential savings have not been estimated, he added.

“The health plans have highly refined systems, at least the good ones do, where they’re in direct and constant communication with their enrollees and have a very good chance of predicting when these things may be going south before they actually happen, thereby avoiding those (incidents) where things do get out of balance,” Shirkey noted.

How it works in Mich.

In a June 12 letter, 11 statewide mental health organizations asked Gov. Rick Snyder to veto the privatization language, in part because the proposal directly contradicts recommendations from three state-initiated reviews of the mental health system conducted since February 2016.

The first review was lead by Lt. Gov. Brian Calley, and involved more than 100 stakeholders including mental health providers, insurers and consumers. Town halls, called “affinity groups,” were then held across the state, attended by roughly 1,100 people including therapists, advocates, insurers and consumers. Nearly 70 percent were patients or their family members. A third review was conducted by a work group of insurers, providers and mental health advocates focused exclusively on the privatization issue.

All three groups recommended against privatization, in large part to preserve the local nature of behavioral health services.

“We know that recovery occurs in the communities and it’s important to keep access to and decisions regarding that care in the community,” said Deborah Garrett, who served on Calley’s committee. She’s the recovery communications director with REAL Michigan, a statewide, grassroots nonprofit for people recovering from substance use disorders.

In Michigan, behavioral health services are administered by 10 regional PIHPs, or prepaid inpatient health plans, a term used by the federal Centers for Medicare and Medicaid Services, which provides Medicaid funding to the states. Behavioral health funding flows from the state to the PIHPs, who then distribute the funds to local community mental health organizations and programs.

Michigan’s 10 PIHPs include the Detroit Wayne Mental Health Authority, Oakland County Community Mental Health Authority and Macomb County Community Mental Health Services. The budget provisions don’t say which PIHPs would be eliminated to get to four.

According to Garrett, the PIHPs distribute some of the behavioral health funds to services that don’t involve direct patient care, but that are crucial to patients or their caregivers.

“There was a lot of concern on the mental health side about things like drop-in centers going away, which really provide a great deal of respite for people who have mentally ill folks (that they care for),” Garrett said. “When you’re dealing with an HMO, are they going to consider that medically necessary?”

Committee members also worried about HMOs’ coverage areas, and whether patients would need to travel out of their communities for services.

“If I am a Medicaid recipient trying to access treatment for substance abuse disorder and I live in Mount Clemens but my HMO contracts with treatment services over in Grand Rapids, am I going to have to go to Grand Rapids for services?” Garrett wondered. “Those are the questions we don’t know the answers to yet.”

In their letter to Snyder, the 11 groups — including the Michigan Psychiatric Society, NAMI Michigan, Michigan Protection and Advocacy Service and others — noted the language doesn’t say if the remaining PIHPs would continue to be public entities. As private companies, the HMOs would not be subject to public mental health reporting requirements, or to disclosure under the Michigan Freedom of Information Act.

The groups also questioned the legality of the proposal, saying that the changes might require a waiver from the federal Medicaid program, saying “Irrespective of the federal government, pilots cannot start without statutory change in Michigan.”

Those issues will be sorted out later, according to Shirkey. Language included in the budget provisions requires the state Department of Health and Human Services to identify any potential obstacles to implementation by Aug. 1, and to recommend corrective actions.

Where it would start

If signed into law by Snyder, Kent County will become the site of the first pilot. It will be up to DHHS to determine where additional pilots will be located. The pilots must be implemented for a minimum of two years, but there is no sunset or maximum time for the projects.

The state will contract with a third party facilitator to “establish performance outcome metrics, finalize implementation milestones, provide guidance and conflict resolution, and other necessary oversight.” A university also would be hired to review the outcomes of the pilot projects. The pilots would be funded with a $1 million appropriation under the budget approved by the House.

The provisions also include a requirement that any cost savings realized from integrating physical and behavioral health services be reinvested into behavioral health services for the duration of the pilot projects.

After that, Shirkey said, assuming the pilots reduce costs, “(W)e’ll have to negotiate how to provide appropriate incentives across the board so we still get the goal we’re ultimately trying to achieve, and that is better, more effective spending on the behavioral health side and mental health side to reduce the cost of the physical health side.”

“We’ll tweak that down the road,” Shirkey added.

Kevin Fischer, executive director of the National Alliance on Mental Illness in Michigan, said turning control of behavioral health services over to for-profit entities will be bad for residents who suffer from mental illness, substance use disorders and intellectual or developmental disabilities.

“I’m not here to say health plans are bad businesses,” Fischer said. “They’re bad for this business.

“In the behavioral health field, there’s only so much administrative cost you can cut and after that the only way you can increase return to shareholder value is from cutting services — there’s no other place to go. That’s just the common sense reality of a for-profit.”

KBouffard@detroitnews.com

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