Tucson behavioral-health agency La Frontera Arizona will lay off 30 employees this month in response to reduced funding from Cenpatico Integrated Care, its CEO said.
About three times as many layoffs might have been needed to offset funding cuts if the agency hadn’t taken steps to mitigate the fallout, agency CEO Dan Ranieri said. Those steps include discontinuing a productivity bonus program for employees, narrowing the scope of case-management services and reducing 22 staff positions through attrition and disciplinary actions in December, Ranieri wrote in a Jan. 13 email to his staff, which was forwarded to the Star.
But an official with the Arizona Health Care Cost Containment System, or AHCCCS, the state’s Medicaid program, said overall behavioral-health funding is actually up this year.
The cuts affect La Frontera’s funding in the category of “general mental health and substance abuse” for low-income adults insured by AHCCCS who are not designated as seriously mentally ill.
In that category, La Frontera’s funding from insurer Cenpatico Integrated Care was reduced from $10.2 million — which was actually somewhat more than the agency needed, Ranieri said — to $4.3 million in the current contract year, which began in October 2016.
Yet La Frontera received a big bump in funding for children’s behavioral-health care this year and a modest increase in funding for adults with serious mental illness, resulting in a net reduction of about $3 million for the agency to absorb, Ranieri said.
In an interview, Ranieri said he understands the rationale behind the cuts, but he said it’s unfortunate how quickly they must be implemented, comparing it to the chaos of “a fire drill.”
“The reduction is larger than we expected and more sudden than we expected,” he said.
Cenpatico — the for-profit subsidiary of publicly traded St. Louis-based Centene Corp. — is one of three regional behavioral-health authorities that contract with AHCCCS to distribute Medicaid funding to on-the-ground provider agencies, like La Frontera.
AHCCCS pays Cenpatico a per-person, or “capitated,” rate based on its members’ utilization of behavioral-health services, Beth Kohler, AHCCCS deputy director, said in a Tuesday email. This year, AHCCCS reduced the payment rate for Cenpatico’s general mental-health-care funding stream, since utilization ended up being lower in that category. Cenpatico, in turn, adjusts the amount it pays its contracted agencies based on their reported utilization rates, Kohler said.
While La Frontera’s utilization was down somewhat last year for adults without serious mental illness, the related funding cut from Cenpatico was out of proportion to the decline, Ranieri said.
Overall funding in the behavioral-health-care system is up compared with last year, Kohler said. Cenpatico’s overall capitation rate increased by 4.5 percent in the current contract year, she said.
Cenpatico told La Frontera about the funding changes in December, and Ranieri decided to delay reductions until after the holidays, he said in the email.
The agency is hoping to help affected employees find jobs in the behavioral-health field, including with La Frontera’s operations in Maricopa and Pinal counties, Ranieri said. Vacated “critical positions” within the agency’s children’s services will be filled with transfers from La Frontera’s adult services — where some vacated positions may not be filled at all — so more existing employees can keep their jobs, he said.
OPIOID EPIDEMIC
The cuts are retroactively effective to October 2016, which marked the start of Southern Arizona behavioral-health agencies’ second contract year with Cenpatico as a regional behavioral-health authority.
The nation is in the grip of an opioid epidemic, and La Frontera won’t reduce its funding that goes toward supporting substance-abuse patients and local methadone or suboxone clinics, which are seeing growing enrollment, Ranieri said.
Previously, about 20 percent of total general mental-health and substance-abuse funding was devoted to outpatient care related to the opioid epidemic. Those services will now eat up about 40 percent of the reduced funding amount, he said.
“There’s more heroin on the streets now than at any time I can remember,” he said. “You certainly don’t want to pull away dollars from that type of treatment because we’re in the midst of a pretty significant epidemic.”
Case-management services will no longer be offered automatically to all La Frontera clients, but rather will be offered when prescribed as part of a patient’s treatment and only for as long as necessary.
Ranieri said that strategy makes sense, and those who need case management will still get it. But the low-need patient — for example, an adult seeking counseling for depression — won’t automatically get a case manager, he said.
“A lot of the folks who we see who are not in the SMI (seriously mentally ill) system probably don’t want or need case management, but we’ve been providing it as a matter of routine,” he said.
Ranieri is optimistic that patients won’t be harmed by the cuts and said the squeeze will probably prompt more partnerships between local providers. This spring, Cenpatico is also implementing a new funding model that will give large provider agencies more discretion in how they use their funding, he said.
“It’s a lot of significant shifts and change happening all at once,” he said. “I actually think the outcome is going to be healthier.”
