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Official Press Release

Contact: Brad Deen

Date: April 17, 2008

Federal Medicaid agency defers mental health payment pending corrections

RALEIGH – Federal Medicaid officials have deferred a portion of payment to North Carolina for a new mental health service until they are satisfied that issues with provision of the service are resolved.

The federal Centers for Medicare and Medicaid Services (CMS) notified the state Department of Health and Human Services on Wednesday that it will defer a quarterly payment for Community Support Services pending approval of a corrective plan from N.C. DHHS. The Division of Medical Assistance, North Carolina’s Medicaid agency, calculates the amount to be deferred at roughly $137 million.

“This action by CMS makes it more imperative that we pursue changes in the Community Support program,” said Dempsey Benton, secretary of N.C. DHHS.

Community Support is one of several new mental health services offered by the state as part of mental health reform. Community Support was designed to assist mental health recipients with community-based skill building and coping abilities. A series of audits and reviews by DHHS over the past year have uncovered inconsistencies with the quality of Community Support care and a misunderstanding of the intent of the service by some providers.

Since August 2007, the Division of Medical Assistance and the Division of Mental Health, Developmental Disabilities and Substance Abuse Services have worked jointly with providers and other stakeholders across the state. Their efforts have focused on clarifying, improving quality of and bringing efficiencies to delivery of the service. Other corrective actions already in place include a moratorium on new providers and imposition of administrative sanctions, such as withholding of payments and terminations from the North Carolina Medicaid program. Overall, Community Support expenses have dropped 22 percent for the most recently ended fiscal quarter, January-March 2008, since the July-September 2007 quarter.

CMS has indicated its appreciation for “the actions that the Division of Medical Assistance has taken to help bring its Community Support Services program under control,” according to the April 16 notice. But until it is able “to determine the ‘good’ expenditures from the ‘bad’ expenditures,” the federal Medicaid agency has decided to defer payment of one calendar quarter’s worth of Community Support payments until it is satisfied with the state’s plan of correction.

CMS originally calculated the deferral at more than $175 million, but a follow-up notice from the federal agency recognized the amount may be overstated. The state’s estimate is $137.78 million.




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