More than a decade ago, North Carolina’s system for providing services to individuals with mental health needs, developmental disabilities and addictive disease was deeply troubled. Allegations of fraud, mismanagement and conflicted governance signaled poor accountability mechanisms.
In response, the General Assembly directed the state Auditor to investigate the situation. In April 2000, the Auditor issued a report identifying two overarching problems: over-reliance on state institutions and lack of accountability among the local area programs responsible for providing community-based services. The findings also documented North Carolina’s failure to comply with the Americans with Disabilities Act’s “integration mandate.”
The report triggered massive changes to state law designed to reform the service system. The changes included a planned reduction of the number of state hospital beds – closing Dorothea Dix Hospital in Raleigh and replacing the derelict facilities in Goldsboro, Morganton and Butner with new buildings. The semi-autonomous governmental “area programs” created to provide direct services were replaced with county-operated systems or “Local Management Entities” (LMEs), acting under long-term contracts with the State to manage services.
Now fast-forward to 2011 to experience a profound sense of déjà vu. The State still relies on institutional-based care, but now in so-called “adult care homes.” Meanwhile, it has failed to develop adequate community-based services. The system responsible for providing services is again in trouble. Allegations of fraud, mismanagement, and conflicted governance again signal poor accountability mechanisms. To make matters even worse, the latest round of systemic failures are compounded by the State’s severe revenue deficiencies.
Again, the General Assembly has intervened. This time, the legislature has passed a law that mandates the conversion of all “Local Management Entities” into “Managed Care Organizations.” Essentially, the state is demanding radical statewide transformation based on an unproven model used by one very small LME called Piedmont Behavioral Healthcare. The state Department of Health and Human Services is being required to standardize and replicate Piedmont’s practices and processes for providing services across the entire state. This is a bit like the tail wagging the dog.
Unfortunately, this change raises several red flags for other reasons as well. Most notably, Piedmont’s practices include a pattern of violations of individuals’ constitutional due process rights and a disregard of judicial and administrative authority. Indeed, the organization I lead, Disability Rights NC, has filed two federal lawsuits challenging the Piedmont model – one of which (KC v. Cansler) challenges the lack of due process as guaranteed by the 14th Amendment and other federal requirements.
There are other problems with this managed care model.
Under the new law, the same organization (the MCO) is responsible for making requests for services and for approving and/or denying those services. This creates an inherent conflict of interest because it pits the need to save money against the needs and bests interests of the consumer – a problem that Piedmont has already been guilty of in multiple instances.
Yet another controversy surrounds a requirement that the new MCOs contract with Piedmont to obtain its business practices and processes. Remarkably, the contract actually contains a “non-disclosure” clause that would, in effect, keep the processes and practices hidden from the public eye. This is a huge problem because MCOs are not private entities but quasi-public entities serving the public interest with public money. Moreover, they’re linked to county governments subject to the state public records laws.
While the state and Piedmont claim the secrecy provisions are necessary to protect “intellectual property,” as a practical matter, such provisions will allow Piedmont and other newly-created MCOs to operate without real public oversight. This is especially true in light of Piedmont’s expansive view that it can refuse almost every request for information – including those with respect to how resources allocations are made, the standards by which providers are evaluated, and many others. This, of course begs the question: If the Piedmont model works so well, then why the secrecy? Why the lack of due process? And without transparency, how can there be public accountability?
In short, it appears that, once again, state leaders have failed to learn from past mistakes and in so doing continue to fail vulnerable populations. Let’s hope that it doesn’t take another decade for them to correct this latest mistake.
Vicki Smith is the Executive Director of Disability Rights North Carolina.
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