Despite Gov. Steve Bullock’s recent announcement that state funding will be partially restored and distributed to agencies hit hard by budget cuts, representatives of mental health, disability and nursing home organizations say the money won’t undo much of the widespread damage already done, nor has it compelled the plaintiffs in two lawsuits against the state to drop their litigation.
Still, it was a breath of fresh air on the heels of a difficult past year for human services in Montana.
“It’s nice to have some good news,” said Pat Noonan, public policy officer for AWARE Inc., a provider of mental health and disability services. “At the very least it will provide some stability, help stop the hemorrhaging. We get a little bit of breathing room before the end of the summer.”
“But it definitely will not reverse some of the damage that’s been done,” he added. “Some of those (agencies and offices) that are gone aren’t going to be coming back from this reversal. It’s going to take a while to build the system back.”
Bullock announced on July 25 that state revenues have come in higher than projected, triggering $45 million to be distributed to agencies impacted by budget cuts over the last year and a half. The cuts were enacted by the Legislature and signed by Bullock last year in response to a $227 million state budget shortfall.
The state agency hit hardest was the Department of Public Health and Human Services (DPHHS), which has made nearly $50 million in cuts, implemented lower Medicaid reimbursement rates to service providers and eliminated case-management contracts with four organizations that serve people with developmental disabilities.
The combination of cuts, rule changes and rate reductions, amplified by the loss of federal matching funds, unleashed layoffs and facility closures across the state among organizations providing mental health and developmental disability services, with the erosion of two critical pillars of their operations: case management and Medicaid reimbursement.
Nursing homes were also heavily impacted, and in early June, the Montana Health Care Association and a coalition of its members sued the DPHHS and its director, Sheila Hogan, alleging the state violated the law by improperly implementing the Medicaid reimbursement rates for nursing facilities and assisted-living facilities.
The lawsuit asked a judge to impose an injunction prohibiting the state from continuing to apply the lower rates and take “any and all actions necessary to adjust payments” to reimburse the plaintiffs.
Disability and mental health organizations and advocates then filed their own litigation in late July, also alleging the Medicaid cuts were illegal under state law and “put Montanans with physical and mental health disabilities at serious risk of institutionalization,” according to a statement by Disability Rights of Montana, the group that filed the seven-count lawsuit with providers and advocates from across the state.
“This lawsuit is the direct result of unlawful and unconstitutional decisions by the state that threaten significant and long-lasting harm to Montanans and their families,” said Beth Brenneman, an attorney with Disability Rights Montana. “The new rates have wreaked havoc on the community-based Medicaid services system.”
The DPHHS is set to receive the lion’s share of the $45 million in restored funding, and though the state won’t decide the details of the allocation until Sept. 1, Medicaid reimbursement rates will be restored in some capacity.
Rose Hughes, executive director of the Montana Health Care Association, said the restoration announcement had no effect on her group’s lawsuit, and a hearing scheduled for Sept. 20 is still expected move forward. Hughes said the state hasn’t provided confirmation that Medicaid rates will be fully restored for fiscal year 2019, and even if they are, the litigation would remain active to pursue claims over losses already incurred, as well as constitutional and Montana Administrative Procedure Act (MAPA) violations.
In addition to the widespread layoffs and facility closures statewide, Megan Bailey, a therapist with Sunburst Mental Health, said many organizations depleted what little savings they had and have been operating in the red.
“Are these restored rates going to be able to build up their savings again? Absolutely not,” Bailey said. “Will communities see new services opening up? No, nobody will see that.”
Bailey said the state’s system for these types of human services was flawed to begin with, overly dependent on reimbursement rates that were already “abysmal” and lacking sufficient tax-derived funding. The cuts “unraveled this very, very precarious system,” she said, adding that the Legislature knew about the budget crisis but “refused to recognize funding mechanisms.”
“We need to understand that these services are a value added to our economy, to our communities,” Bailey said.
If the state doesn’t identify additional funding mechanisms, Bailey said, there’s “no guarantee that this won’t happen again next fiscal cycle.” The funding restoration is “basically patching a sinking ship, and we’re going to continue to take on water.”
“We don’t need to reinvent the wheel,” she said. “There are states and communities doing this well.”
Noonan with AWARE Inc. said the current crisis has illuminated shortcomings and disparities in the reimbursement system and the need to articulate a more sustainable funding model moving forward. AWARE, a plaintiff in one of the lawsuits against the state, has eliminated 100 full-time positions in the wake of the cuts and closed its Kalispell campus, including two group homes.
Beyond the funding restoration, providers plan to engage state officials and legislators as they embark on the long road of rebuilding a system that had developed over decades and suddenly was turned on its head.
“It’ll be very interesting to see what the future of human services will be,” Noonan said.