Mental Health Contracts Changed to Reflect New Funding Formula
November 23, 2011—With some kinks fixed and recalculations made, a new formula defining the amount of funding each county receives for mental health programs is here to stay, said Richard Harris, the director of the Oregon Health Authority’s Addictions and Mental Health division
In a presentation to the legislative committee that writes the budgets for the state’s human services programs last week, he said that that amount of money counties receive for children and adolescent mental health crisis programs and general outpatient services for adults and children will now be based upon county population and the prevalence of mental illness. Some mental health services, such as residential programs and mental health care for older adults, won't be effected by the new formula.
Previously, those dollars were based on a wide variety of factors, including whether some services were available in some counties but not others; the existence and number of residential programs, and whether other funding, such as grants, could be leveraged with additional state funding.
The change is due to a bill passed during the 2007 legislative session sponsored by Rep. Gene Whisnant (R-Redmond) to distribute state dollars more equitably.
“[It] was designed to make our reallocation process sensitive to population changes from county to county,” Harris said. “Some counties were growing in population, and some counties were decreasing in population, but the funding stayed the same.”
The formula went into effect this July, and some counties, such as Deschutes, Lane and Washington received extra money. At the same time, Multnomah County sounded the alarm that it would be losing money -- approximately $5.56 million for services to the uninsured and low-income people with severe mental illnesses. That cut, county officials said, would egregiously impact the county’s mental health programs.
The state added back approximately $4.7 million of the cuts, and the county voted in September to use some of its one-time only money, general fund reserves and Verity funds to make up for the rest of the cuts.
“We knew there were going to be losers and winners,” Harris said. Before July, counties were notified of the change, and given an approximation of what the new budget would be. “The shock, when it actually came to the counties, was pretty difficult for some counties.”
That prompted the Addictions and Mental Health Division to review each of its contracts with the counties. Because service level and demand had changed, the contracts were out of date, and some miscalculations had been made.
With the ink on the contracts now dry and an expectation that they will be signed within a month, those calculations have been corrected, and the amount of money will remain fixed.
Harris said that as a result of recalculations, $4.8 million was added back to the state’s budget for mental health services, which will be split and shared among the counties.
Given that Multnomah County is receiving $4.7 million, there's another $100,000 for the rest of the state.
“But still, it means that some counties will have fewer dollars than they had in the last budget period, and some counties will have additional dollars,” Harris said. “But these should reflect the population changes in those counties.”
Legislators didn’t raise concerns about the new formula or its impact on counties. But Sen. Alan Bates (D-Ashland) commented that there are some counties that contribute more general fund dollars to their mental health programs than others, and that some counties may be providing services to shared populations.
“It gets to be really difficult,” he said.
Rep. Jean Cowan (D-Newport) eluded that much of the kerfuffle may not have happened if the division’s contracting process had been simpler.
Karynn Fish, the spokeswoman for the division, said it's common for contracts to be amended throughout the year because of changes in service level, demand, and other facts.
There have already been 2,500 changes to the contracts since July, she said. There were 2,500 changes to the contracts during the 2009-2011 biennium, she said.
“I was truly struck with the complexity of this system and the amount of contract changes,” Cowan said. “This is an extremely cumbersome process.”
Harris responded that the Addictions and Mental Health Division’s contracting process may improve as a result of state-wide reforms to the Oregon Health Plan (known as “health transformation”).