California’s Mental Health System May Be Headed for Crisis

Family members, loved ones and health care professionals who work with mentally ill patients are familiar with the cycle:

A person with bipolar disorder, schizophrenia or another mental illness will function in society for a while until the pressure becomes too great, medication is missed or some trauma — emotional or physical — pushes too far. The situation moves into crisis mode, and the person requires emergency attention — medical, law enforcement or both.

California’s mental health system shows signs of being on the same cycle, reaching crisis several times in the past four decades and approaching another one now.

At least three counties are threatening to back out of the Medi-Cal mental health program if the state does not raise reimbursements to a level high enough to cover costs.

Other counties are having other kinds of crises ranging from mental health facilities closing to judicial overloads triggered by mental patients landing in jail.

More than other facets of the state’s hodgepodge health system, mental health care is county-driven in California. Partly because the nature of mental illness directs health care toward indigent and vulnerable parts of society and partly because of the state’s history, treating mental illness often falls to county-run hospitals and clinics.

“Lots of counties are having to reduce services or close clinics and hospitals because of eroding funding,” said Patricia Ryan, executive director of the California Mental Health Directors Association. It’s partly due to Medi-Cal contractions, but not entirely, Ryan said.

“The state is having a hard time paying counties on time, and that’s hard on everybody, but it makes things particularly difficult for small counties that don’t have ability to borrow money,” Ryan said.

Three Counties Threaten Medi-Cal Pullout

So far, three counties – Riverside, Glenn and Shasta — have given formal notice they may cease participating in the state’s Medi-Cal mental health program, in which the state essentially subcontracts with counties to manage care with a combination of state and federal Medicaid funds. County-run Medi-Cal mental health programs provide psychiatrists, therapy, case management, drug coverage and other services for residents eligible for Medi-Cal.

Riverside, the largest and most recent to threaten leaving the system, sent notice to the state earlier this month with a unanimous vote by county supervisors.

The California Department of Mental Health issued a written statement:

“Counties have the first right of refusal for serving as the local Medi-Cal Mental Health Plan, but no county has ever exercised this right before. Counties are critical and valued partners in California’s mental health system, and we are hopeful that, particularly during challenging economic times, our continued collaboration with them ensures vulnerable populations get the mental health care they need.”

Other Counties, Other Problems

Although cuts to the Medi-Cal program are the biggest worry in some of California’s 58 counties, many counties are feeling the financial crunch in other ways.

Earlier this month, supervisors in Stanislaus County voted to ban family practice doctors in county health clinics from managing patients with severe mental disorders, even though clinics are often the last resort for some patients.

Although the decision affects a relatively small number of people — about 160 patients in the Medically Indigent Adult program who get treatment and psychiatric drugs at the county health clinics — the decision to seek another way to deal with mental illness is indicative of the kinds of troubles counties face.

The MIA program in Stanislaus provides medical care for more than 6,000 county residents who are not eligible for Medi-Cal or other government coverage.

In Sonoma County, the county-run psychiatric hospital closed last year, a privately run in-patient mental facility was scheduled to close this year. Health officials also made plans to redirect hundreds of mental health outpatients to private, community-based treatment centers.

Faced with the prospect of no overnight facilities for mental patients, law enforcement officials in Sonoma County prepared to process more mental crisis patients through the county jail and to ship patients out of the county if they needed more than 24 hours of care.

“To have jail as mental health care provider of last resort is not a good situation,” said Farrah Ting, senior legislative analyst for the California State Association of Counties. “But that’s happening more and more in many counties in California, not just Sonoma.”

“The services that might have helped before it comes to that are eroding in many communities, and you’re going to start seeing incarceration as a more common form of treatment,” Ting said.

“And that’s worrisome on a personal level as well as a financial level. Not only is it often not the right thing to do, it’s also not the most cost-effective. Keeping people in jail is not inexpensive,” Ting said.

A group in San Diego County has formed to address the cycle of mental health patients winding up in the county’s court and jail systems. Called Mental Health Court, the group includes health care, court and law enforcement officials. Its goal is to redirect mental health patients who break the law into medical and support programs instead of the main court system and jail.

California’s Mental Health History

Some veterans of California’s mental health system contend you can’t understand what’s going on now without knowledge of what came before. Others say it doesn’t do any good.

Either way, here’s a brief look at some of the milestones that brought us here.

In the early 1960s, community-based mental health programs in California were among the best in the country, according to the California Mental Health Directors Association. During Republican Gov. Ronald Reagan’s two terms, 1966-1974, the state’s mental health system was taken apart, put back together in a new form and hasn’t been the same since. The Reagan era and subsequent years are summed up by CMHDA as a “lapse into decades of funding instability and program confusion.”

More recent attempts to reform the mental health system met with some success. In 1991, the Legislature passed a new mental health funding system and two new taxes to help pay for it. Commonly known as “realignment,” the new system transferred financial responsibility for most of the state’s mental health and public health programs from the state to local governments.

“For a while, realignment funding allowed counties to put money aside,” said Ryan of CMHDA, “but now the trust funds are all used up, the economy is suffering — which means counties are hurting — and the only choice is to continue to reduce services.”

In 2004, voters approved Proposition 63, the Mental Health Services Act which levies a 1% tax on about 30,000 Californians with personal annual incomes in excess of $1 million. The tax, which raised about $1.8 billion over the first three years, comes with strings attached. The money is supposed to be used for developing new programs, not paying for existing ones.

It also creates an unusual situation. While counties juggle to keep existing Medi-Cal- and realignment-funded programs afloat with declining revenue sources, they’re also planning new programs.

“It’s a struggle for counties, figuring out how to create new programs when the regular program is eroding,” Ryan said.

Legislation May Provide Relief

Several counties — including the three threatening to drop Medi-Cal mental health — claim that slow reimbursement from the state jeopardizes their ability to deliver mental health services.

Sen. Dave Cox (R-Fair Oaks) has introduced a bill requiring timely reimbursement of mental health services claims to local governments.

SB 1349 would require the State Controller’s Office to reimburse local governments for mental health services within 90 days of the receipt of a reimbursement claim by the Department of Mental Health. The measure also requires interest to be paid on late payments.

In a letter supporting the bill last month, the California State Association of Counties wrote:

“Due largely to an accounting error between the state Departments of Health Services and Mental Health, state DMH ended the 05-06 fiscal year with many unpaid Medi-Cal claims from counties. In some cases the claims dated back to 2004. This situation has created a cash flow crisis in several counties and directly threatens their ability to continue providing mandated mental health services.”

Asked for a reaction, the California Department of Mental Health responded in writing:

“Regarding claim processing, all counties are receiving claim payments. We meet with counties monthly as a group and individually as they request regarding claim payments. The department knows the status of every single claim and can report that to counties upon request.”

Lobbying for More Money

Mental health advocates are lobbying for more money on several fronts:

  • Reinstatement of cost-of-living adjustments, which ended in 2000;
  • Reinstatement of a 5% cut in reimbursements in the late 1990s; and
  • Avoidance of the 10% cutback all state programs face in the current budget crisis.

Depending on what happens on several fronts across the state, the mental health system may generate legal action before any crisis could come to a head.

“If there were lawsuits, that would force the state to address a lot of the issues that have been avoided,” said Ting. “Given the state’s bleak fiscal out look, the kind of scenarios that might be able to lift the mental health system out of its problems seem very unlikely at this point, and it probably will require some kind of crisis situation — like a lawsuit — to make something happen.”

“The pattern in mental health seems to happen the same on the large scale as it does for individuals,” Ting said. “Programs don’t get attention until they’re in crisis, the same as individual people.”

Related Topics

Health Care Costs Insight Medi-Cal Mental Health