Colorado mental health providers say they were "betrayed" by state Medicaid program

When state leaders decided to shake up Colorado's behavioral health system and end decades long no-bid contracts with giant regional mental health centers, they asked independent clinics to step up.

The message was clear: If clinics would begin offering needed services, like partial hospitalization programs for opioid addiction or case management to connect people to food or housing, they would get higher reimbursement rates from the state Medicaid program.

The rates, some 25% higher, were enticing to small and medium-sized mental health providers across the state, so many of them spent the last year building new programs to fill gaps in the mental health system and applying for the new designation — called "essential safety net provider" — from the state Behavioral Health Administration.

Now, however, some of those mental health clinics say they were "betrayed."

Just as the clinics' new programs are up and running, the state Medicaid department has called off its directive that the regional agencies that process claims have to keep paying the enhanced reimbursements. Even worse, some clinics said they earned the designation as "essential" from the Behavioral Health Administration, but were then rejected by their regional agency that processes the payments and told their new services were not needed.

Dawn Martin, who started a substance abuse treatment center called Recovery Unlimited in Colorado Springs in 2011, built a new partial hospitalization program to enhance the center's outpatient counseling services.

She received state approval as an essential provider in January, then asked for the enhanced payments from her local "Regional Accountable Entity." The state Medicaid division outsources with companies to manage seven regional entities that reimburse providers for treating Medicaid clients. One company, covering Denver and Aurora, is a locally owned nonprofit, while the rest of the state's regional entities are managed by or contract with two commercial insurance giants, Anthem and United HealthCare. One of those is a nonprofit, called Northeast Health Partners, that manages services in 10 counties and contracts with a company affiliated with Anthem.

While Martin waited for the regional entity to finalize the new contract on what she thought was a promised deal, she opened her new partial-hospitalization program that provided 24 hours a week of holistic treatment to people dealing with addiction.

Then the regional entity rejected her.

"We found that we have a sufficient number of providers participating in our network, therefore we are not adding additional providers," the notification said.

Martin was dumbfounded, considering there were no other partial-hospitalization programs for substance abuse in the area and her new one was constantly full.

She managed to keep it open for about two months, but the costs without the higher reimbursement rates were too much to sustain. Martin closed the program and had to borrow $200,000 to pay off the losses and save the rest of her business, which provides behavioral health care to 400 people and medical care to almost 300.

"If I was to shut down today," Martin said, "I want to know where they would go."

Changing regulations lead to stressed-out therapists

Another clinic, the Compassion Collaborative, which has about 300 patients and specializes in trauma-focused therapy in Colorado Springs, revamped its structure to become an "essential" provider.

Clinic owner Haley Wise increased services and gave her staff raises to compensate for a long list of new responsibilities, including making sure no one was turned away and that any patient who needed other services got a "warm reference" to other clinics. That means that if a person who has an eating disorder comes to Compassion Collaborative, which doesn't offer eating disorder counseling, staff must find an eating disorder clinic with an opening and get that person an appointment within seven days.

Wise got the new state designation of "essential safety net" and renegotiated contracts with her regional entities for enhanced payments, but delays in the process meant she was providing extra services for about four months without the extra pay.

And the stress caused by the state Medicaid program's evolving rules made the process feel high stakes and, at times, miserable.

The Colorado Department of Health Care Policy and Financing, which includes the Medicaid program, initially required that regional entities pay the enhanced rates for any provider that had achieved the new "essential" designation.

Then the department emailed mental health providers a "bulletin" in the fall saying any clinic that was not approved by the Behavioral Health Administration by Jan. 1 was not guaranteed a renegotiated contract at higher rates.

And then the department sent a bulletin this month saying it would no longer require enhanced payments and that come July 1, the regional entities that pay providers could decide who to contract with and what they are going to pay for all the "essential" services.

"Now we have no clue what we are going to be paid," Wise said. "We are in limbo. No one knows anything."

It's been a whole year of feeling "yanked around," with clinics first being told that Colorado really needed their help to serve people at risk of suicide, with opioid addiction, with disabilities, she said. Now, clinics are expected under the rules of their new "essential" designations to provide the services and submit the paperwork proving they are providing coordinated care, yet they have no guarantee of enhanced payments.

"It feels like they are using us," Wise said. "It seems we were really misled."

Stephanie Farrell, CEO of Left Hand Management, which helps mental health providers deal with regional entities, put it in even stronger terms.

"In this state, Medicaid providers are not viewed as the customer — we are hostages," she said.

The state Medicaid program is "putting providers out of business," said Farrell, who has dozens of clients among her 300 statewide that are struggling after adding new services.

"They have lost the trust of the provider community," Farrell said. "It is outrageous that for the privilege of working with people with the most complex needs, providers are pushed out by the state."

Medicaid now focused on maintenance, not growth

The enhanced payment to boost safety-net services was the latest of many incentive programs that the state Medicaid program has put in place over the years. It's typical that incentives are offered during the transition period, but not made permanent after the shift in services, said Cristen Bates, deputy director of the Colorado Medicaid program.

Overall, the restructuring of the $1.1 billion Medicaid behavioral health care system in the state has been hugely successful, she said. Colorado has in the past five years nearly doubled the number of mental health providers who are contracted with regional entities, now at more than 12,000.

Of those, there are 192 essential safety-net providers that have been licensed by the Behavioral Health Administration. It's unclear how many of those new "essential" providers ended up getting renegotiated contracts with the enhanced higher rates, however. A total of 254 essential safety-net contracts exist among the five regional entities, but many providers have contracts in multiple regions.

Starting July 1, the state directive is lifted and regional entities have the authority to decide which providers to contract with and what rate to pay them. That way, the market, not the government, is dictating pay.

The regional entities "have choices about who they can contract with" and the state cannot tell them they must "contract with provider XYZ," Bates said.

"No provider has a guarantee," she said. "No provider who gets licensed, who goes to school, who opens up a business, whatever it is, no provider is guaranteed to contract with Medicaid. We understood that starting a new practice or changing the way that you practice could be challenging, but it was never meant to be this permanent guarantee."

Also, a state budget crisis and possible federal cuts mean the state Medicaid program has moved away from a "growth and transformation" mode and into a "maintenance" phase, she said.

"We need to be really careful about unchecked Medicaid growth," Bates said. "We are not putting in new policies that greatly expand access."

Providers expect rates to drop July 1

Andrew Rose, a Boulder psychotherapist and a leader of a 154-member association of solo clinicians and small behavioral health clinics called COMBINE, said he expects reimbursement rates will drop come July 1 when the managed care entities are no longer required by state officials to pay enhanced rates. He blames a system that includes for-profit companies, Anthem and United HealthCare, serving as the middleman for Colorado Medicaid.

Free-market principles, he said, don't work when we're talking about care for people who are poor, have disabilities and are dealing with addiction.

"The solo and small clinics provide more than half of outpatient care for the Medicaid population," he said. "We would like to be included and considered in policies that affect us. We treat the most vulnerable Coloradans in real pain — suicidal teenagers, high-confict divorce."

The regional entity that serves Denver and Aurora, the nonprofit Colorado Access, said it has not rejected a single provider with "essential" status. It has renegotiated contracts with 57 providers in the past year at enhanced rates, said Dana Pepper, vice president of provider performance and network services.

Colorado Access is now in the process of reviewing the claims through the essential safety-net program and has not yet determined what rates it will pay after July 1, she said. It's possible that the entity will continue paying the enhanced rates, Pepper said. Colorado Access is also studying what the industry calls "network adequacy," to see what types of providers it needs within the network.

"These are vulnerable providers serving vulnerable members," she said. "It's a hard business."

Several mental health providers told The Sun that working with the nonprofit was far easier than dealing with another regional entity affiliated with Anthem, the Colorado Community Health Alliance. The alliance serves El Paso, Park and Teller counties in the Colorado Springs region, as well as Boulder, Jefferson and other counties in northwest of Denver.

Officials from the alliance did not respond to a question from The Sun about why they have rejected contracts with essential providers but said via email that they "believe behavioral health is essential to overall wellbeing." The entity "complies with all regulatory requirements" set by the state Medicaid division, spokesperson Emily Snooks said.

"An extra burden" for mental health providers

Joyce Smith, clinical director of Creative Treatment Options in Denver, is another mental health provider waiting for some good news, or at least some guidance from state officials.

She's receiving higher reimbursements from one of the regional entities she works with, but is waiting to hear back from others. Meanwhile, she's already started providing extra services as an "essential safety-net provider," including for people convicted of domestic violence who need court-ordered therapy.

"If we are not going to get paid the extra amount then I'm not going to want to pay my case manager to do the extra work," she said. "It's an extra burden."

The new regulations "don't really have teeth" and there's been a lack of guidance from the state, she said. At the same time, Congress has threatened to cut Medicaid nationwide and Colorado doesn't have the funds to backfill those cuts.

"Everything is so up in the air and it's so crazy," Smith said. "We don't even know what's going to happen with Medicaid. The whole country is in that position. It's a scary thought for people that are underserved and under-treated."