The Budget Realities of Colorado’s Community Mental Health Centers

By Kara Johnson-Hufford

Here are two things we know about the state of mental health in Colorado: The number of individuals who need services and supports for all sorts of mental health conditions is increasing and the amount of funding the state has to invest in services and supports is not keeping pace.

It’s an untenable budget situation exacerbated by the larger and more rapid loss of Medicaid funding as program eligibility determinations have removed thousands of individuals from the program as a result of the end of the public health emergency.

As we’ve joined state lawmakers and state department leaders in grappling with this growing problem, we’ve noted that many community mental health centers—which serve the most vulnerable in our state—could be forced to make significant cuts to critically important services such as crisis care, residential programming, and wraparound services for seriously mentally ill individuals. These are the very programs our centers are best positioned to provide and that the communities they serve need the most. Another area of possible reduction is in staffing, the largest cost driver for any organization.

You’d be right to wonder why centers would contemplate cuts to  critical services and staff at a time of growing need and ongoing staff shortages.. The answer to that question is in the economics of how these non-profit centers work.

  1. For most centers, Medicaid funding provides more than half of their total budget.

As discussed, Medicaid funding is a declining source of revenue. Individuals who lose Medicaid coverage don’t suddenly need less treatment. They most often become uninsured and end up as individuals that centers continue to treat without compensation. As a result, budget shortfalls are often found in areas of greatest expenditure, like staffing, or in programs where the client volume is not enough to sustain access to critical services.

2. Additional sources of revenue that make up another significant percentage of a center’s budget come from sources that aren’t predictable.

A major chunk of additional funding for CMHCs is “capacity” funding from the state’s Behavioral Health Administration and the marijuana tax cash fund (which itself is in steady decline). These sources cover wraparound and crisis services, and other supports that must be constantly available and can’t be reimbursed on a per-visit basis. t Unfortunately, the available funding is simply not sufficient to cover needs and is subject to state budget fluctuations. Most centers expend the state general fund dollars they receive well before the end of each year. So they also rely on grants, donations, local government contracts, Medicare and contracts with commercial insurers (which pay less than Medicaid and include more restrictions). and. This patchwork of unreliable funding creates challenges for centers when their fixed costs to provide the 24/7 365 infrastructure to serve their communities only increases in cost due to annual inflation.

3. The overarching economics of community mental health centers isn’t like that of providers of similar services.

Commercial providers of a la carte therapy directly connect the services they provide to revenue and demand, as any typical business would. However, because of the unique role they play, community mental health centers can’t do this. For example, walk-in crisis care and acute treatment services – which are predominantly provided by centers – require around-the-clock facilities and staffing, regardless of how many individuals need them at any given moment. And no revenue source covers the full cost of these critically important services. That’s why, when centers are forced to cut budgets, crisis services are an initial place they often look to cut back. This is the worst possible outcome for communities, yet one that could easily become reality. c

4. To fulfill their missions in our communities, centers regularly spread funding from services that are reimbursable across services that aren’t compensated but are necessary for stabilization and recovery.

Centers typically provide inpatient services, outpatient services, partial hospitalization, crisis/emergency services and “other” services. This “other” category includes supports that are essential to ensuring an individual is able to stabilize their condition and make progress toward either resolution of their issue or ongoing management of their issue. Few of these essential services--which include things like care coordination, screenings and referrals to other community organizations or partnerships with foundational organizations like schools, police, or hospitals--are compensated. But no one would deny that coordinating multiple points of care and other supports is the most efficient way to help individuals make progress. Often called “wraparound” services and supports, these are the ongoing lifelines that community mental health centers provide and which are underfunded or completely unfunded.

Colorado has long been at the bottom of the national list for investments in community mental health. But eventually, a failure to invest in the care Coloradans need can only result in less care for all. That’s not a goal of anyone in our state leadership, nor is it an outcome that community mental health centers want. That’s why we are working hand-in-hand with policymakers and stakeholders on strategies to develop sustainable and predictable financing for Colorado’s behavioral health safety net: drawing down additional federal funding through the Certified Community Behavioral Health Clinic (CCBHC) demonstration, crafting payment models that reflect actual costs, and creating opportunities for partnerships across providers to further knit together the safety net and repair holes.  By collectively addressing these challenges, we can safeguard the future of mental health support in Colorado and ensure that no individual or community is left behind.

Kara Johnson-Hufford is the Chief Executive Officer of the Colorado Behavioral Healthcare Council, an association of providers offering mental health and substance abuse treatment in communities across the state for every Coloradan who needs these supports.