Justin A. Hinkley

Lansing State Journal

LANSING - An administration official sought to assure lawmakers on Thursday that Gov. Rick Snyder is not pushing to privatize state mental health services.

In what state Rep. Rob VerHeulen, R-Walker, said "contemplates a major shift," the governor in his 2017 budget proposal called for shifting management of Medicaid dollars for mental health, substance abuse and developmental disabilities from groups of public community mental health organizations called Prepaid Inpatient Health Plans, or PIHPs, to private health management organizations, or HMOs.

The move was quickly criticized by community mental health groups as a bid to send public health care dollars to profit-driven companies.

That's not the case, Tim Becker, chief deputy director of the Michigan Department of Health & Human Services, told a legislative panel on Thursday.

The proposal is "not pulling money out of the mental health system," but is "reinvesting more to direct services" for patients, Becker told the state House subcommittee in charge of DHHS spending. "It is not a privatization of the mental health system."

Becker said the HMOs would be required to contract with the community mental health groups already providing those services. Moving management of those dollars funding to the HMOs would encourage more coordination of physical and mental health services.

"We believe it is time to address those issues that have for too long been separate issues," he said. "Our goal here is to make sure these folks have a cohesive system, a connected system."

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Lawmakers remained skeptical.

Republican Rep. Ed Canfield, a physician from Sebewaing, questioned how adding HMO administration to mental health services could streamline overhead.

"At each level you have more people managing the money, there seems to be an administrative cut," he said.

Snyder's budget proposes no savings, only a shift in funding, from the change. Becker said the cost of PIHP management could be cut, so more money could be spent on services. The public groups said their overhead is lower than in the private sector.

Canfield also said he was concerned that the HMOs could force patients to change medications, which could put them "in deep trouble, very fast." Becker said prescriptions would be consistent under the new management.

The department offered to meet individually with lawmakers to answer further questions. The Legislature will hold numerous hearings on the budget over the next several months before approving a final spending plan for the fiscal year that begins Oct. 1.

Snyder's budget calls for the funding shift to happen by Sept. 30, 2017, because numerous contracts have to be drafted or amended.

Contact Justin A. Hinkley at (517) 377-1195 or jhinkley@lsj.com. Follow him on Twitter @JustinHinkley. Sign up for his email newsletter, SoM Weekly, at on.lsj.com/somsignup.