The mental health and substance use disorder safety net is plagued by uncertainty

By Kara Johnson-Hufford

For Colorado’s safety net providers, these are challenging times. For Colorado’s Community Mental Health Centers, it’s hard to see the path forward because uncertainty in a host of areas clouds the picture.

Why the apprehension? Because many of our state’s bedrock, community-based mental health and substance use disorder providers are on the verge of cutting programs and reducing services intended for Colorado’s most vulnerable populations. Uncertainty around foundational budget considerations is making it difficult for providers to make informed choices. In this chronically underfunded area of healthcare, the margin for error is nonexistent.

The convergence of several factors is creating an unsustainable situation for many community mental health centers. Here’s a look at the current pressures safety net providers are facing and where budget clarity is needed.

  1. The number of uninsured and under-insured patients in Colorado is skyrocketing.

The end of continuous Medicaid eligibility during the COVID public health emergency was inevitable, and state and county Medicaid officials did their best to prepare. Yet in many regions, state estimates of how many people would lose coverage, and how quickly, significantly lagged actual disenrollments, with a much steeper and deeper downward trend than anticipated-- a reality for which many providers had not budgeted. Losing health care does not stop people from seeking treatment for their mental health and substance use issues (nor should it). Because of their mission, community mental health centers continue to provide services even when individuals lack insurance or are underinsured. In total, CBHC’s members are collectively more than $24 million underwater due to this escalating crisis. One center alone has an $8 million deficit. Counter to the expectation that individuals losing Medicaid would readily find commercial insurance coverage, our members’ experience is that, on average, less than 10 percent are doing so. And the commercial options they can find do not cover the broader array of supports and services our clients often need.  

  • Immediate and significant relief in the form of funding support from the state has yet to materialize.

Colorado’s Medicaid agency is retroactively adjusting rates, as required by federal law, to reflect the fact that the reimbursement rates set last summer were not actuarially sound. However, the Department has informed us that nearly all of that new money is going to the managed care entities that administer Medicaid in Colorado and little to none will flow through to providers because those intermediaries did not have enough money to pay claims. And the Behavioral Health Administration, whose “capacity funding” for safety net behavioral health providers is designed in part to cover the cost of behavioral health services provided to uninsured Coloradans, was able to free up just $1 million dollars spread over the six most affected centers. Again, our members are looking at a collective deficit of more than $24 million. The BHA has significant unspent American Rescue Plan Act funds. Shoring up our state’s safety net is an explicit direction of some of the state bills outlining acceptable purposes for those dollars. We respectfully ask that the state use some of those unspent funds to cover this significant short-term funding gap.  

  • Significant new regulations required of community mental health providers are not coming with additional funding support.

Colorado’s community mental health centers welcome the opportunity to continue to improve on behalf of individuals in the communities we serve. Conceptually, we welcome the transition to a prospective cost-based payment model (PPS) for full-service “comprehensive” providers (like community mental health centers) that supports outpatient treatment plus wraparound and 24-hour services that shouldn’t be funded by a fee-for-service model. But in order for prospective payments to work as intended, they must be based on actual costs of care. So far, it does not appear that the proposed reimbursement model reflects the higher administrative and staffing costs that come from significant new regulations taking effect in July. Rather, the state has opted to apply a simple multiplier based on national averages. At a time when providers are already struggling financially, it is impossible to see how current service levels can be sustained.

  • Many of the essential services rates are too low and do not cover the cost of care.

In addition to the new “comprehensive” provider category described above, Colorado has also created a subset of “essential” services, including withdrawal management and crisis services. These services are reimbursed on a retroactive fee-for-service basis and are not included in the PPS. Yet for some providers, these proposed payment rates, including the per diem rates for crisis stabilization units and acute care units, also appear to be lower than the cost of providing it, in one case as much as 25 percent. And the organizations that disburse payments for substance use disorder treatment will likely be taking a reduction in their funding, which will be passed on to providers as well.

This is just a sketch of the largest and most urgent of the financial problems facing community mental health centers and the areas where uncertainty is severely hampering their ability to set a budget, let alone develop a longer-term strategy for sustainability and growth. At least two community mental health centers have already laid off administrative staff in an attempt to stave off cuts that would impact services, but these types of cuts – particularly at a time when all centers have increased administrative burdens – is not sustainable.

Unfortunately for Colorado communities who want and need increased, not fewer, options for mental health and substance use treatment, this direction won’t meet the need. It is an outcome no one wants. But it is the most likely outcome unless we deal honestly with our current situation and seek solutions together.