Mental health providers in Colorado express feelings of betrayal from the state’s Medicaid program after significant changes to the funding structure. In an attempt to reform the behavioral health system, state officials ended long-standing no-bid contracts with large regional mental health centers and encouraged independent clinics to develop services, promising higher reimbursement rates for essential services.
The new funding model proposed reimbursement rates up to 25% higher for clinics that provided critical services like partial hospitalization for opioid addiction and case management for housing and food access. Many smaller providers, eager to address service gaps in the mental health system, invested time and resources over the past year to become designated as ‘essential safety net providers’ by the state Behavioral Health Administration.
However, as these clinics launched their new programs, the state Medicaid department abruptly reversed its directive, stating that regional agencies responsible for processing claims would no longer be required to pay the enhanced rates. Clinics reported instances where they earned the ‘essential’ designation from the state but were subsequently rejected by local agencies, claiming a sufficient number of providers already existed.
Dawn Martin, who opened Recovery Unlimited in Colorado Springs in 2011, developed a new partial hospitalization program to complement her outpatient services. After receiving state approval as an essential provider in January, Martin sought enhanced payments from her local regional agency. Despite launching her program, which provided intensive treatment for addiction, the regional agency denied her request, citing a full network of providers.
Martin struggled to maintain the program for two months without adequate funding, ultimately closing it after incurring $70,000 in debt to cover payroll and keep her other services running. She expressed concern about where her patients would turn for care if her clinic shut down.
Another affected clinic, Compassion Collaborative, which specializes in trauma-focused therapy, also adapted its services to meet the new requirements. Owner Haley Wise expanded offerings and raised staff salaries to accommodate additional responsibilities, including ensuring timely referrals to other clinics for patients requiring services not offered at her facility. Although Wise achieved the essential safety net designation, delays in contract negotiations meant her clinic provided enhanced services for four months without receiving the promised payments.
The shifting regulations and uncertainty in reimbursement rates have led to heightened stress among mental health providers. The Colorado Department of Health Care Policy and Financing initially mandated that regional entities pay enhanced rates for any provider with the essential designation. However, recent communications indicated that providers who were not approved by the Behavioral Health Administration by January 1 would not receive guaranteed contracts at higher rates.
The department also announced that starting July 1, regional entities would have the discretion to decide which providers to contract with and at what rates. This shift raised concerns among providers about potential rate reductions, especially as many clinics are already struggling to meet the needs of vulnerable populations.
Andrew Rose, a Boulder psychotherapist and leader of a network representing small behavioral health clinics, anticipates reimbursement rates will decline once the managed care entities are no longer mandated to pay enhanced rates. He criticized the involvement of for-profit companies in the Medicaid system, arguing that market principles do not apply to care for low-income individuals facing complex challenges.
The regional entity serving Denver and Aurora, Colorado Access, stated it has not rejected any essential providers. It has renegotiated contracts with 57 providers at enhanced rates, although it is still reviewing how much it will pay after July 1. Meanwhile, other regional entities affiliated with larger insurance companies, like Anthem, have faced criticism for their handling of contracts with essential providers.
Joyce Smith, clinical director of Creative Treatment Options in Denver, is among those awaiting clarity on reimbursement rates as she provides additional services for clients with specific needs. She noted that without adequate compensation, her clinic may struggle to maintain its expanded offerings.
Overall, while Colorado has seen an increase in the number of mental health providers engaged with Medicaid, the lack of stable funding and clear guidelines poses challenges for clinics that aim to serve the state’s most vulnerable residents. The uncertainty surrounding Medicaid reimbursements and the future of essential services continues to worry mental health providers across the state.