Michigan’s mental health system has many layers for those in need to navigate

Much like Michigan’s no-fault auto insurance system, the community mental health system is seen by some as a model to the country that focuses on keeping people in their homes and communities — and out of psychiatric hospitals.

And like Michigan’s once-mandatory unlimited medical benefit for injured drivers, a comprehensive mental health system also is costly — and those pressures have gotten worse in recent years.

In some corners of the state, the publicly run behavioral health system was awash in red ink before the pandemic.

In 2019, MDHHS yanked a contract for the Lakeshore Regional Entity that oversees the flow of behavioral health Medicaid funding to seven counties in West Michigan because the PIHP had run up a $16 million structural deficit.

During that same time period, the four-county PIHP that distributes $163 million annually in Medicaid dollars to behavioral health providers in Lenawee, Livingston, Monroe and Washtenaw counties said it racked up nearly $42 million in deficit spending in fiscal years 2017, 2018 and 2019, according to court records.

To get by, the Washtenaw County Community Mental Health Agency covered a $10 million shortfall in 2019 with “local funds meant for other purposes … putting other county obligations at risk,” according to a lawsuit filed against MDHHS last year seeking a state bailout.

At the end of 2018, Macomb County Community Mental Health had less than $200,000 in its risk reserve fund — a dangerously low amount of cash on hand for a health care organization with a $250 million annual budget.

All told, nine of Michigan’s 10 PIHPs had structural deficits of nearly $93 million in 2018, according to financial data compiled by the Michigan Association of Health Plans, the trade organization for private health insurers in the Medicaid managed-care business.

For critics of the public health system, including the private insurance companies vying for a slice of Michigan’s $20 billion Medicaid pie, the chronic deficits point to a system of care where each tax dollar travels through multiple layers of government.

Having Medicaid patients in need of treatment for psychosis or a controlled substance addiction leads to a “finger pointing over who’s responsible for paying” for behavioral and physical health problems that often intersect, said Dominick Pallone, executive director of the Michigan Association of Health Plans.

“At the end of the day, we’re trying to make the Medicaid benefit look and feel a lot more like a commercial benefit,” said Pallone, whose organization represents 12 major health plans.

Michigan’s 10 regional PIHPs are an animal of the state, unlicensed public insurance and managed care entities created by statute in 2011.

They receive a set amount of dollars from the Michigan Department of Health and Human Services to contract with 46 community mental health authorities that encompass single counties in populous southern Michigan and multiple counties Up North.

The bureaucracy of Michigan’s public mental health system comes with a contract that’s some 700 pages long.

“When the money comes to us, it also comes with a lot of requirements — and a lot of those requirements just cost money,” said Dave Pankotai, CEO of Macomb County Community Mental Health.

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