Reform in N.C.: substance abuse treatment providers losing out to state system.(Report)

North Carolina's addiction treatment providers, who have been struggling to assimilate into the state's far-reaching reforms begun in 2001, are facing multiple challenges: a payment system perceived as overloaded with paperwork, rates that are too low, and a state agenda that blends substance abuse, mental health, and developmental disabilities. If substance abuse providers can't fit in by billing fee for service and by offering an array of services, they may not be able to continue to operate.

There are three aspects of the North Carolina treatment system that immediately stand out as unique compared to other states:

1) Treatment is managed by local management entities (LMEs) that operate under state authority and process the claims filed by providers.

2) Mental health, substance abuse, and developmental disabilities are all under the same agency, leaving providers who do only substance abuse treatment at odds with the overall state reform plan which includes the developmentally disabled, and

3) A fledgling Community Support Services program has expanded dramatically with a projected $900 million budget this year, funded almost entirely from Medicaid dollars, but been used more for developmental disabilities and the mentally ill than for substance abuse.

The problem is the complicated structure that rewards the easiest services--the Community Support Services (CSS)--and makes payment difficult for the most expensive. CSS are viewed as easy because they can be done by a paraprofessional. Originally meant to support housing, employment, and other aftercare services, the CSS funds were used mainly for the developmentally disabled at first. Until April 2007, the hourly rate was $80 for CSS, but is now $50 an hour. It's still seen as a profitable business because a paraprofessional can perform it and be paid only $10, letting the provider use the difference for overhead and profit. For-profit providers came from as far as California to take advantage of this opportunity, because Medicaid funds are not capped.

In changes due to take effect this year, it will no …