New programs, static funding strain Iowa's mental health system

Tuesday, June 4, 2019

This 10-part series, a collaborative effort of the newspapers of Rust Publishing, NWIA, examines the myriad issues surrounding the mental health care crisis in Iowa. Reporters and editors from the Spencer Daily Reporter, Storm Lake Pilot-Tribune and Dickinson County News have contributed to the report.

Iowa Gov. Kim Reynolds trumpeted the state's newly-minted children's mental health system, which calls for children's services in Iowa's mental health regions, regional crisis stabilization, mobile response teams, and 24-hour hotline access. While the state put $1.2 million toward home and community-based mental health services, no additional funding was given to the state's mental health regions to coordinate the newly required children's services. The regions are already tasked with overseeing the state's adult mental health care system.

"Today marks a major milestone for mental health in our state," Reynolds said, as she signed the bill May 1 in the capitol rotunda. "The historic bill that I will sign this afternoon is life-changing. It helps lift the veil of stigma associated with mental illness and replaces it with hope, healing and comfort of community."

The view from the governor's residence on Terrace Hill is far different from the one Kim Scorza sees at the Seasons Center for Behavioral Health offices in Spencer.

The Seasons CEO is frustrated by a general lack of funding coming down from the legislature for mental health services, particularly in light of Iowa's increasing suicide rate.

"They need to practice what they preach," Scorza said. "You do not pass laws, and stand up at the capitol, and slap each other on the backs, and praise each other for great work done and then not fund it. That's unacceptable. We literally have people dying. I'm not kidding you. They're taking their own lives because of the brokenness within the mental health system."

Both Scorza and state Sen. Zach Whiting, a first-term Spirit Lake Republican, agreed with Reynolds in that overcoming the stigma is necessary. Whiting sees the need for increased access to care for Iowans.

"Certainly, finding some degree of sustainable funding to go into that program is important, but these can't be exclusively government run and funded services," Whiting said. "We need to make an effort to have a dedicated source of funding to that, but it can't be an unlimited source of funding."


Clay County Supervisor Barry Anderson chaired the Compass Pointe Board and saw the nine-county behavioral health provider close in mid-April. He said a number of formerly optional services have become required by the state over the last few years, without an uptick in state funding. Scorza said recent expansion of the state's required adult mental health services actually caused some regions to cut their then-optional children's mental health services in order to balance their budgets.

"What ended up happening was the children lost, because we couldn't provide those services because we didn't have funding to pay for them," Scorza said.

As a follow up to the Children's Mental Health bill, the legislature allowed counties to adjust property taxes for mental health services in anticipation of the new program, but some officials still doubt the region can do all the state is asking. Several counties in the region operate with a $15 per capita mental health levy, and Dickinson County Supervisor Kim Wermersen calculated a $43.04 rate is needed in order to break even with the region's $2.7 million in budgeted expenses. That rate exceeds the state's current $30.30 levy cap. Anderson said the region may currently have enough cash reserves to carry itself through approximately 2022.

"At that point, we're going to have to jump our levy way up," Anderson said. "For people of Clay County, I don't want to be jumping levy rates up and down all the time, because all that does is people ask, 'Why did my taxes go up again?'"

State Sen. Mark Segebart, a Vail Republican, said he expects the state may circle back in later sessions to fund the children's program, as it did the adult program. As a former county supervisor, he said he empathized with boards in Dickinson and Palo Alto County, who voted not to fund the state's new children's program which some in Dickinson County called an unfunded mandate through higher taxes.

"I love the idea of the regions, and I think that's a good place to go, but we can't as a state expect them to carry that property tax burden all by themselves," Segebart said. "I think the state needs to come up with another (way)."


The funding and reimbursement process for Compass Pointe changed at the start of 2019 and contributed to a fiscal free fall for the behavioral health provider. It's services used to be covered with a consistent, monthly grant from the state. Under the state's now six-month-old process, agencies like it receive funding from the state on a per-client basis. Attorney Barry Sackett, who is handling Compass Pointe's liquidation, said harsh winter weather kept clients often with limited transportation at home, resulting in fewer dollars for the agency. In addition, Sackett said Compass Pointe went almost three months without reimbursement for the work it was able to provide during that time. The agency closed its doors April 15.

Hope Haven didn't receive the same restructured grant as Compass Pointe, but the agency decided its mental health services will end June 27, because of narrowing margins. Doug Smit, Hope Haven's director of mental health and family services, said the agency's rate of reimbursement from state managed care organizations or MCOs hasn't increased since 2008. He estimated 80 percent of the agency's clientele are covered by Medicaid, the federal-state program that helps cover healthcare costs for families in need.

"When you look at the budget that the governor's proposing for this year, there's some stuff for mental health in there, but it's robbing from Peter to pay Paul that's just my opinion on it," Smit said. "They want to start new programs, but then they take money from one part and move it to another instead of adding dollars to it."

Scorza said many providers lose money when treating Medicaid clients, because the rates set by an MCO's state contract are often below what it costs an agency to provide care. She went on to say, if an agency were to increase its prices, the state rate would remain unchanged, increasing the provider's bad debt. In addition, providers aren't allowed to bill Medicaid clients directly for care.


Gov. Terry Branstad privatized the state Medicaid system in 2016, and the model continues under Reynolds. Republican State Rep. John Wills of Spirit Lake said privatization slowed the growth of Medicaid expenses but has not stopped their climb. In fact, he said Medicaid is the fastest growing expense in the state budget. Fellow state Rep. Megan Jones, a Sioux Rapids Republican, said the state budget has also grown since Branstad's decision, but not at the same rate as Medicaid.

"While it may have its problems, it could be way worse," Jones said of the current Medicaid system. "If Branstad hadn't issued the executive order and we were still under Medicaid, we'd be in a big world of hurt."

Wills believes the state should work to improve the system, rather than return to a state-managed model a return would cost $6 billion by his estimate. Jones said she feels the state keeps a tight reign on its MCOs through profit caps and other measures, and Wills said a recent bill could potentially penalize MCOs if providers aren't paid in a timely manner. The level of state scrutiny was a major reason United Healthcare chose to leave the MCO pool, according to Whiting.

Scorza noted the state used MCOs like Magellan before privatization, but said it's more difficult for providers to get reimbursement from today's MCOs.

"I lived through all of them," Scorza said. "This is very different, because you're dealing with large companies that are very much beholden to their shareholders, and you feel that."

Seasons has added full-time staff to deal with various MCO requirements, and reimbursement rates for psychological testing have dropped by a third since the MCOs recategorized types of treatment, according to Scorza.

"That's why you see agencies going under," Scorza said. "We're going in good faith to serve people of this state taxpayers of this state, our neighbors, people in our communities. We're going in good faith to care for them, and then there are just crazy amounts of roadblocks that are put up by the managed care companies."

Some MCOs require providers to preauthorize treatment to qualify for reimbursement, but the office of the Inspector General in April announced it will be examining whether such requirements were used to wrongfully deny claims.

"The contractual arrangement shifts financial risk for the costs of Medicaid services from the state Medicaid agency and the federal government to the MCO, which can create an incentive to deny beneficiaries access to covered services," the announcement said.


While a majority of states use an MCO model, Iowa is one of only a few in the country which funds mental health services through property taxes, according to Jones, and she feels that approach should be reexamined. She and Segebart both highlighted a one-cent sales tax increase as a possible solution an approach Wills noted would be inflationary. The first three-eighths of any sales tax increase is required to fund the Iowa Water and Land Legacy a trust which has gone unfunded for nearly a decade but lawmakers would potentially have five-eighth of a cent with which to work.

"I would put it in regional mental health funding children's mental health," Segebart said. "It would do a wonderful job of supplying that, but I don't know that I can find too many people willing to do that in my party."

Scorza said she believes it may take a grassroots movement to spur meaningful change for mental health funding within the state and federal government.

"At the end of the day, either they're going to have compassion on their neighbors and vote to fund the mental health system or they're not," Scorza said.

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