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Competing mental health bills move forward Legislators move forward on controversial bills affecting groups overseeing behavioral health providers

Winston-Salem Journal - 6/26/2017

State legislators appear content to push forward competing - and co-opted - bills that would tighten oversight of behavioral health managed-care organizations.

The full House voted Thursday 112-0 to approve Senate Bill 350, which has been gutted of language clarifying opioid trafficking offenses and replaced with language from House Bill 403.

The original version of HB403, which passed the House by a 109-0 vote April 6, would establish limits on what Cardinal Innovations Healthcare System can provide in executive director pay - including no more than 30 percent of the average salary of peers. It also provides for the clawing back of compensation as warranted.

SB350 goes to the full Senate for a vote today.

Meanwhile, a second Senate committee approved Thursday recommending its version of HB403, which represents a drastic rewrite that also aims to rein in non-core expenditures by the state's seven behavioral health MCOs. The bill goes to the full Senate.

The solution recommended by Sen. Ralph Hise, R-McDowell, in the rewrite eventually would dissolve the MCOs, potentially as early as 2019.

Hise, co-chairman of the Senate Health Care committee, is an unabashed critic of the behavioral health MCO system, preferring the commercial insurer approach.

"Both bills cannot or will not be law," said Rep. Donny Lambeth, R-Forsyth, and co-sponsor of the original HB403. "The chambers will need to decide which, if either one, we need to support and vote out."

There has been vocal opposition of the HB403 rewrite from legislators, health care agencies and the public.

For example, Rep. Nelson Dollar, R-Wake, said Thursday the original HB403 has been "waylaid" by the Senate.

As such, it is not clear whether there is enough time or willpower to reach a compromise before the projected July 4 end of the session.

The competing bills are "more about trying to figure out the best way to get their competing ideas heard," said Mitch Kokai, a policy analyst with Libertarian think tank John Locke Foundation.

If either chamber approves a co-opted bill, the other chamber has the option of accepting the change, "the easiest option, or rejecting them and setting up a conference committee that might or might not have time to work out differences," Kokai said.

"It really is a matter of whether and how to go about trying to negotiate differences."

Cardinal Innovations

At the heart of both bills, though not specifically named, is Cardinal, which oversees behavioral health providers who serve more than 812,000 enrollees in 20 counties, including Alamance, Davidson, Davie, Forsyth, Rockingham and Stokes in the Triad.

Both co-opted bills deal with issues raised by a May 17 report from the state Auditor's Office in regard to Cardinal, such as using funding for expenses for alcohol, first-class airfare, charter flights, holiday parties or similar social expenditures, and holding board meetings, whether formal or informal retreats, outside of North Carolina at high-end venues.

The Senate rewrite prohibits Cardinal spending on those non-core activities.

The audit also determined that Cardinal executive director Richard Topping's board-approved salary of $635,000 a year was nearly 3½ times the $187,364 maximum recommendation in state guidelines for the top executive of a behavioral health MCO.

"The recent and disturbing audit made clear that taxpayer-funded agencies need to be held to account when they make lavish spending decisions outside their core mission," Hise said.

The two bills reopen - with the support of Senate leader Phil Berger, R-Rockingham - what appeared to have been a settled issue on divisive Medicaid reform that occupied the 2014-16 legislative sessions.

The reform initiative, submitted by the McCrory administration to federal health regulators on June 1, 2016, represented a hard-fought hybrid compromise on which groups oversee Medicaid developmental disability, mental health and substance abuse services.

While the Senate prefers a for-profit oversight solution, the House wants not-for-profit health care systems involved through provider-led entities. The compromise includes elements of both.

"The House feels strongly in support of our original bill and the need to fix some of the foundational problems with the MCO structure, as was noted by the audit report," Lambeth said.

"We decided to send our original fix back to the Senate in an effort to fix the problems," Lambeth said. "I think we will be able to work out our differences before we adjourn."

Hise said his justification for reopening the Medicaid reform issue is his belief that at least one of the seven remaining MCOs is headed toward failure, and possible two to three more in coming years. He said he believes the Trump administration could approve the current Medicaid reform request as early as Spring 2018.

Senators from both parties said they want to hear from N.C. Secretary of Health Mandy Cohen on the ramifications of accelerating the dissolution of the MCOs.

rcraver@wsjournal.com 336-727-7376 @rcraverWSJ