- New Center nearly out of cash, closing May 14 after $4.2 million in payment cuts
- One of the largest mental health provider agencies in Wayne County
- Funding cuts could mean other mental health providers are in danger
New Center Community Services CEO Joy Calloway
New Center Community Services has given notice that it will close May 14 after absorbing 22 percent rate cuts the past year and $4 million in payment cuts the past two years, according to CEO Joy Calloway.
Founded in 1979, the nonprofit New Center offers mental health services for 4,800 adult and children in five locations with about 140 employees. Calloway has been CEO the past five years.
In a April 20 letter, Calloway said New Center must close because payment cuts the past several years initiated by the Detroit Wayne Mental Health Authority and CareLink, which funds New Center, negatively affected at least 2,000 patients and led to the center to turn away more than 800 patients.
“The bottom line impact to New Center totaled more than $4 million between the current and last fiscal years,” Calloway said in the statement. “The March 2017 rate standardization resulted in an average 22 percent cut to New Center’s rates with a $2.2 million hit to our bottom line for the fiscal year.”
Last December, Calloway, who was up for the top job at Detroit Wayne Mental Health Authority, became the subject of a conflict between Wayne County Executive Warren Evans and DWMHA Chairman Herbert Smitherman. After a DWMHA audit found overbillings by New Center, Evans objected to the authority forgiving only the $95,000 found in a 5 percent sample of the invoices when that sample suggested a potential $2 million could have been overpaid.
Calloway cried foul over the process, but later withdrew her name after several weeks of controversy. The Wayne County executive appoints six authority board members, and the mayor of Detroit appoints the other six.
“DWMHA is committed to working closely with staff and consumers from New Center Community Services and CareLink (one of four contract agencies under DWMHA) in ensuring that the nearly 4,800 consumers receiving services through (New Center) will be connected to a new provider (agency) of their choice,” Willie Brooks, DWMHA CEO, said in a statement.
The state Office of Inspector General of the Michigan Department of Health and Human Services also has an active review underway on New Center. DWMHA is supposed to conduct a second audit this year to determine if a corrective action plan is successfully completed and the billing problems eliminated. The effect of that audit is uncertain now that New Center is closing.
Like many mental health agencies that serve the Medicaid population in Southeast Michigan, New Center has been adjusting to payment changes begun four years ago by the state Department of Health and Human Services. MDHHS cut state Medicaid funding to the three county authorities in Southeast Michigan — Wayne, Oakland and Macomb — by more than 5 percent each year since 2013. The payment reductions continue through this year.
The cuts, called rebasing, were part of an effort to move to a new statewide Medicaid rate for Michigan’s 10 regional mental health authorities. Medicaid also has cut traditional Medicaid funding as the Healthy Michigan Medicaid expansion began in 2013.
Nearly half of the 330,000 people served in the state’s behavioral health system live in Wayne, Oakland and Macomb counties. New Center is one of the largest of more than 1,400 provider agencies in Wayne County.
Industry insiders say there are many other smaller mental health agencies in Wayne County and other parts of the state that also have financial problems and could be in danger of closing. One source says that Michigan has too many smaller agencies with under 100 patients and there needs to be consolidation to reduce administrative costs and improve efficiencies.
One major behavioral health administrator already is in danger of folding. Lakeshore Regional Entity in western Michigan, one of 10 regional prepaid inpatient health plans, has lost more than $10 million, has exhausted its reserves and could close by Sept. 30 unless it becomes solvent.
In a report earlier this year, the Michigan Association of Mental Health Boards concluded the state has shortchanged the mental health industry by at least $100 million the past two years. State Medicaid officials have disputed the charge, but the state continues to discuss funding shortfalls.
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