1. www.TheNationalCouncil.org The NATIONAL COUNCIL for Community Behavioral Healthcare How Bad Is It? Arizona 2010 Linda Rosenberg MSW

2. www.TheNationalCouncil.org Through the Looking Glass… Will healthcare reform really change the healthcare system? If reform results in shift from high cost acute services, what will purchasers want to purchase? How will spotlight on mental health and substance use conditions change behavioral health management/payment structures? But what about state budget deficits? Will any of these great plans mean anything if were not around in 2014?

3. www.TheNationalCouncil.org This morning… >Data from the States for the Hill >Survey of Member Associations >What We Can Do – pressing our case; retooling our organizations

4. www.TheNationalCouncil.org Some Good News… >Washington, DC - August 10, 2010 - Congress today passed legislation on a 247-161 vote that extends the increases in the Medicaid matching rate, known as Federal Medical Assistance Percentages (FMAP), through June 30, 2011. The enhanced FMAP was set to expire at the end of the year. >Under the new law, the increase in FMAP rates will be reduced from the current level of 6.2 percentage points to 3.2 percentage points from Jan.-Mar. 2011 and to 1.2 percentage points from Mar.-June 2011.

5. www.TheNationalCouncil.org The Bad News…

6. www.TheNationalCouncil.org How Bad Will it Get? Total State Budget Shortfall in Each Fiscal Year, in Billions USD Figure from the Center on Budget and Policy Priorities: McNichol, E., & Lav, I.J. (Updated January 20, 2010). Recession Continues to Batter State Budgets; State Responses Could Slow Recovery. http://www.cbpp.org/cms/index.cfm?fa=view&id=711

7. www.TheNationalCouncil.org State Tax Revenues Declined in Every Reporting State (44 States Reported)

8. www.TheNationalCouncil.org National Governors Association Report State Fiscal Situation: the Lost Decade >Fiscal condition of states deteriorated dramatically because of the depth and length of the economic downturn, and state officials do not expect this situation to improve any time soon. >Previous downturns have proven that the worst budget years for a state are the two years after the national recession is declared over. >States recoveries from current recession may be prolonged with most economists projecting a slow and potentially jobless national recovery. >The bottom line is that states will not fully recover from this recession until late in the next decade. Source: The State Fiscal Situation: The Lost Decade http://www.nga.org/Files/pdf/0911FISCALLOSTDECADE.PDF

9. www.TheNationalCouncil.org After Stimulus Wanes, Gaps Could Approach 7% of Spending, or $120 Billion Under the High-Gap Scenario Source: What Will Happen to State Budgets When the Money Runs Out? Donald J. Boyd, Nelson A. Rockefeller Institute of Government, February 19, 2009, http://rockinst.org/pdf/government_finance/2009-02-19-What_Will_Happen_to.pdf

10. www.TheNationalCouncil.org Percent of SMHAs with Budget Cuts (Results Based on 45 SMHAs Reporting)

11. www.TheNationalCouncil.org Fewer Reductions to Medicaid-Funded Mental Health than SMHA Budgets >SMHAs reported that Medicaid used for Mental Health has been more protected than State General Fund services. Largely attributed to the use of Stimulus (ARRA) increased FMAP funds and the leveraging effects of Medicaid funds. FY2009FY2010FY2011FY2012No Cuts SMHA Cut33 States (73%) 41 States (91%) 33 States (73%) 11 States (24%) 3 States (7%) Medicaid MH Cut 18 States (40%) 26 States (58%) 25 States (56%) 10 States (22%) 13 States (29%)

12. www.TheNationalCouncil.org SMHA Responses to Cuts in Overall SMHA Budget ( Results Based on 45 SMHAs Reporting)

13. www.TheNationalCouncil.org Types of Services SMHAs are Cutting ( Results Based on 45 SMHAs Reporting)

14. www.TheNationalCouncil.org Increased Demand for Services During the Recession

15. www.TheNationalCouncil.org What Are Members Telling Us?

16. www.TheNationalCouncil.org Our Survey of State Associations and Member Organizations… >Some state associations - TN, MA, MI, CA, VT, NJ, and KY - report the implementation of waiting lists or reduced service intensity as commonly used to ensure continued provision of services. >Some report program closings – peer support centers and residential – and locations. Others report mergers and some states - OH, NJ, and DC - report organizations closing.

17. www.TheNationalCouncil.org Our Survey… >Illinois trying to bridge a $13 billion budget gap - proposed mental-health budget cut of $91 million reduced to $35 million after patients and practitioners protested at the governors mansion earlier this month. Even so more than 70,000 people, including 4,200 children, are in danger of losing basic community services. >Mississippi cut mental health budget by 8 percent for three consecutive years, resulting in consolidation of six crisis and community mental health centers. In the fiscal year that started July 1, the state plans to further cut funding to localities for mental health services.

18. www.TheNationalCouncil.org Our Survey… >MA, MI, IN, CA, VT, CT, NJ, RI, KY - indicate organizations are using staff hour reductions or layoffs to reduce expenditures. >More than 90% of survey respondents cited the need for construction, expansion, and renovation of facilities, 96% reported they lack funding for potential or existing capital improvement projects. At a time of county and state budget cuts, capital funds are nonexistent, and we dont see that changing for a long time. Executive Director in Maryland

19. www.TheNationalCouncil.org What Can We Do? Have you built a business case for protecting MH/SU funding?

20. www.TheNationalCouncil.org The Spill Over Effect of Untreated Mental Illnesses and Substance Use Disorders on State Budgets National Council of State Legislators For each additional dollar invested in addiction treatment, taxpayers save at least $7.46 in costs to society, including the cost of incarceration For the most seriously impaired, community-based services, such as supportive housing, keeps individuals actively engaged in community settings and saves cost as illustrated by Arizonas supported housing program: > 58% reduction in emergency room visits > 50% decrease in jail time > 50% increase in earned income

21. www.TheNationalCouncil.org Mental Health Weekly… Facing struggles over state budget cuts provider organizations are turning to David Lloyds data management system – SPQM - to increase capacity, reduce costs, improve care and make their political case… By using the information we gathered through SPQM, we had the ability to present a message to the legislature that there was a need to restore funding to mental health centers, ASAP. George Delgrosso, Colorado Behavioral Healthcare Council

22. www.TheNationalCouncil.org What Can We Do? Are you following Monica Oss advice? Short Term Cash Management Cost Reductions Trolling for Interim Business Opportunities All while preparing for the post-reform healthcare environment

23. www.TheNationalCouncil.org Our Members…Michigan Budget cuts are going to be bad next year in Michigan. As we try to address budget cuts, we are looking for innovative ideas that have been implemented or considered to secure alternative funding. Are folks out there getting more into fund raising, developing more of an entrepreneurial approach or developing new service lines? Maybe we can all help each other.

24. www.TheNationalCouncil.org Our Members…Georgia We are operationally much more like a business than 5-10 years ago. All employees have productivity rates based on exceeding their salaries, benefits and overhead. We use data to make all decisions - when we establish a new service, we "price it out", basing the salary on what can be produced or choose not to offer it, if it can't pay for itself. Weve eliminated services that can't break even. Weve reduced our benefit package. Weve consolidated...closed buildings, reduced staff....become as efficient as possible.

25. www.TheNationalCouncil.org Our Members…Washington State We are the business of staying in business. Using cost/benefit analysis, weve left contracts on the table that would have put us in the red within a year. This shook up our state MHD on a recent offer on a new service. The expectation was that we would take whatever they give us. Were demonstrating that we must meet the bottom line before assuming new services/liability/risk. For some, this is business as usual. For many, its a brave new world. For all of us, it is the cost of doing business. Once we have handle on that data, we can better negotiate contracts with for-profit insurance carriers and health care reform once it hits our streets.

26. www.TheNationalCouncil.org Our Members…Pennsylvania Were aggressive about seeking funding from SAMHSA, NIMH, NIDA, local foundations, Medicaid BH MCO. Raising money is in all directors performance evaluations. Weve worked to create a data driven culture. All programs collect outcomes data and we position ourselves as data sophisticated provider that uses evidence based practices. Weve closed old fashioned programs that foster dependency rather than promoting recovery – creating a recovery oriented system with peer support and certified peer specialists. Were also very politically active working to protect rates that cover costs, attract earmarks for new innovative programs and promote better public policy.

27. www.TheNationalCouncil.org Our Members…Iowa It always comes down to money. We are a safety net provider, but like most safety net providers, we ourselves operate without a net. We have increasing demands for services and shrinking funding from the various sources. All money is pumped into providing services and were managing cash, reducing costs across the board and exploring new business opportunities.

28. www.TheNationalCouncil.org >But there is one critical thing you must all do to be ready for healthcare reform – you have to be at the table for the discussions taking place in your communities, states and at the national level. If behavioral healthcare providers and stakeholders dont succeed in that task, your consumers, your organization and the overall healthcare system will suffer.

29. www.TheNationalCouncil.org Behavioral Health Organization Readiness: An Overview of Whats Needed to Succeed in the New Healthcare Ecosystem