Millions Unclaimed: Behind California’s Troubled Mental Health Care Funding System

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Alex Briscoe didn’t know much about how local governments pay for mental health care when he joined Alameda County’s Health Care Services Agency in 2004. But he knew there was a problem.

Briscoe had come from a job at Children’s Hospital Oakland where he saw kids routinely turn up in the emergency room in serious psychological distress. These children had nowhere else to go. There was no support system to help kids who’d experienced trauma, or to catch mental health problems before they escalated, Briscoe recalled.

At the county, Briscoe soon realized a big part of his agency’s job was to secure federal Medicaid dollars to pay for health care services in the community. But the county wasn’t getting enough of that funding to cover what was needed.

“There was no mental health system for kids,” Briscoe said. “That’s because there were no funding streams. We were looking at what we considered to be an epidemic of youth violence and social dislocation, and we were committed to doing something.

“And we knew you had to pay for it, or it didn’t happen.”  

With guidance from the agency’s then-director, David Kears, and chief financial officer, Vana Chavez, Briscoe began looking for ways to increase Medicaid funding. The team began looking closely at a little-known reimbursement category called Mental Health Medi-Cal Administrative Activities.

As the name implies, these funds are for administrative activities related to providing mental health care to people enrolled in Medi-Cal, California’s low-income health program. In essence, counties can be reimbursed for expenses such as referring people experiencing a mental health crisis to services, program administration, planning work, policy development and helping people apply for Medi-Cal benefits.

The funds, Briscoe said, weren’t easy to obtain. To access the money, county administrators and mental health contractors had to document their time in 15-minute increments, match it to specific categories, fill out piles of paperwork and battle audit inquiries from the state agency that administers Medicaid funds.

But Briscoe and his team were determined. Between 2004 and 2014, they amplified the amount of these funds the country received annually from about $3 million to $17 million, Briscoe said. They combined this money with other Medicaid dollars to establish over 200 mental health programs and 29 health clinics in local schools. And they hired community-based organizations to provide mental health services to children in need.

“We were able to use those tools to expand access to care to 10,000 children,” Briscoe said.    

But Alameda County is an anomaly in California. At a time when a third of the state’s population relies on government-funded health care, most California counties are failing to apply for millions of dollars that could be used to broaden access to mental health care, an analysis by the California Health Report has found. Data from California’s Department of Health Care Services shows that only a handful of counties apply for Mental Health Medi-Cal Administrative Activities reimbursement, and those that do often obtain a low amount compared to their population.  

Collectively, California counties are walking away from more than $100 million a year in this federal funding for their mental health programs, Briscoe estimates.

The discrepancy raises questions about the effectiveness and equity of the state’s administrative claiming process for county mental health plans at a time when California is struggling to meet people’s mental health needs. The funding gap also suggests that counties are missing out on funding for what Californians said in a recent poll was their number one health care priority: ensuring that people with mental health problems have access to treatment

“It means less money for providers, fewer services,” said Briscoe, who went on to become Alameda County’s health agency director and now works as an advocate for health reform. “When you only have so much money, the more money you take for your indirect costs, the less there is for providers of services.”

Of 58 Counties, Only 12 Applied

Administrative reimbursements account for a small percentage of the total funding that county mental health departments receive. In the 2017 to 2018 fiscal year, county-based Medi-Cal mental health plans received $4.9 billion in funding overall, from federal, state and local sources. By comparison, total Mental Health Medi-Cal Administrative Activities reimbursements to counties amounted to just under $29 million.

But state data suggests these administrative reimbursements have the potential to be a significantly larger funding source. Out of 58 counties in California, only 12 applied for the reimbursement last fiscal year. Counties that didn’t submit claims include Riverside and San Bernardino, the state’s fourth and fifth largest counties, respectively. These two counties collectively account for 4.6 million people, or almost an eighth of California’s population.

Among counties that did submit claims, two counties received nearly 60 percent of the total of these administrative reimbursements. Alameda County, which ranks seventh in population size, received almost $12 million from the program, much more than any other county. Los Angeles County, California’s most populated county, obtained $5.4 million.

Meanwhile, San Diego, the second largest county in the state with 3.3 million people, obtained just over $1 million in these administrative reimbursements. Orange County, the third most populated county, claimed only $200,000, less than 1 percent of all reimbursements made.

“The vast majority of counties could benefit from participation,” said Patrick Sutton, a consultant who helps local governments understand Medi-Cal reimbursement programs.

“And I think there’s questions for other larger counties like Orange County and San Diego: Could they draw more down? … It certainly warrants looking into.”

‘I Was a Hustler’

Part of the problem, Briscoe said, may be that the application process for reimbursement is so onerous.

“I was a hustler,” he said. “I saw how much need there was and felt that any money was good money. We had a strong entrepreneurial spirit to our work.”

During his tenure, Alameda county added staff members to process claims, taught providers to file for them and pushed back against administrative roadblocks imposed by the state, he said.

Jerri Applegate Randrup, a spokeswoman for Alameda County, said the county has a tradition of seeking to maximize revenue for Medi-Cal, including mental health administrative services. But it takes effort. “The program requires significant time and attention from both County staff and community providers in order to ensure compliance with State and Federal requirements,” she wrote in an email.

Many counties don’t have the time, knowledge or staff members to handle the reimbursement claims, Briscoe and Sutton said. Both described the claims process as very complicated. At the same time, the state imposes an excessive level of scrutiny on reimbursement applications, making counties wary of having to deal with audits. Some counties simply decide not to bother applying for the funds, Briscoe said.

San Francisco is one county that found the Mental Health Medi-Cal Administrative Activities claim requirements too burdensome, and so decided not to apply. In the 2016 to 2017 fiscal year, the county claimed a modest $104,000 from the program. But last year, the county dropped out after the state changed the reporting rules, said Rachael Kagan, director of communications for the San Francisco Department of Public Health. The state Department of Health Care Services said the reporting change followed instructions from the federal government.

The new rules make it even more complicated for mental health providers to track the time they spend on reimbursement-eligible administrative tasks, Kagan said. Given the relatively small sum the county had received from the program in the past, it no longer seemed worth applying, she said.

“It was a much higher administrative load to take on,” she said. “For operational reasons it was very difficult to comply, and then for clinical reasons our providers in behavioral health already have many things that they’re required to do, so it wasn’t very feasible for them.”

Complex rules have also deterred San Bernardino from applying for the reimbursements, said Aimara Freeman, community outreach coordinator for the county’s behavioral health department.

The “requirements are extremely specific and the paperwork requires a significant amount of staff time to complete,” Freeman said in an email. “The cost of this staff time lessens the value of the reimbursement.”

Freeman said San Bernardino uses another Medi-Cal claim option to recover administrative costs, but would gladly use Mental Health Medi-Cal Administrative Activities reimbursement if it weren’t so complicated. There are some expenses that can only be claimed through that fund.

A spokesman for Riverside County, Thomas Peterson, said finance officials there hadn’t applied because they didn’t think the county qualified for the program.

An Archaic System?

Los Angeles County, meanwhile, is ramping up its efforts to apply for the reimbursement, said Mental Health Department Deputy Director Mimi Martinez McKay. Martinez McKay said a new director took over the department two years ago, and since then administrators have been looking for ways to improve on past procedures.

“We are doing it better, and we also understand we have a ways to go,” she said. “Any time there’s funding that’s available and we’re able to claim it … we want to claim as much as we possibly can.”

In a statement, the state Department of Health Care Services agreed that many counties may not have the resources to pursue the reimbursement.

Many counties “likely determined that the reimbursements are not worth the effort,” wrote spokesperson Katharine Weir-Ebster in an email. “This is mostly true of small counties with limited resources.”

The state offers two fiscal trainings each year in which it explains the reimbursement system to counties, participates in monthly conference calls about the program, and provides ongoing technical assistance to counties, she said.

For Briscoe, who is now campaigning for an overhaul of California’s mental health funding system, the problem is bigger than counties not adequately applying for the funds. He thinks lack of participation in the program is emblematic of an archaic mental health system in California that makes it absurdly difficult for county mental health plans to function.

Instead of requiring counties to apply for reimbursement, county mental health services should be funded in the same way as Medi-Cal physical health services: through managed-care plans that receive a monthly amount upfront to care for each beneficiary, Briscoe said. Counties also need to be able to use Medicaid dollars for preventive work that doesn’t require children to be diagnosed with a mental illness before receiving services, he added.

Briscoe said he’s proud of what Alameda County was able to achieve with reimbursement funds, but he doesn’t see it as a blueprint for other counties.

“We need payment reform in order to create a more just and equitable safety net,” he said. “These funding mechanisms have to be simplified.”

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