Accord Appears Near on Mental Health Funds

In a development that could head off the closure of clinics and avert layoffs, Ventura County leaders say they are close to an agreement with the state Department of Mental Health that would allow $5.3 million in mental health funding to begin flowing again.

County officials, led by Supervisor John K. Flynn, are working closely with regulators to reverse an erosion in mental health services found at 21 clinics across the county. In a deal being negotiated, the county would be required to meet a series of performance measures as a condition of receiving money the state has withheld since July.

“It looks pretty good at this point,” Flynn said. “The state wants to start the engine up and this is a way to do it.”

If approved, the contract would signify the first big breakthrough in the county’s months-long standoff with the state over control of the mental health dollars. County officials contend the money never should have been cut off because improvements have been made, but the state has steadfastly withheld funding as it continues a review.

It also represents welcome news as the county continues to recover from last year’s disastrous decision to merge its mental health and social service agencies. That decision, later rescinded, sparked a series of state and federal reviews that have indirectly cost the county $15.3 million so far.

“This is one hurdle, but it’s a big one,” Supervisor Frank Schillo said. “It does look like this is going to happen and I’m really pleased.”

Officials at the state Department of Mental Health did not return phone calls Wednesday. But according to Flynn and supervisors Kathy Long and Schillo, details of the pact could be completed within two weeks, allowing the county to resume receiving monthly payments on Nov. 1.

That timing is crucial, Schillo said, because without the funds the county would almost certainly be forced to close some mental health clinics and lay off the staff members who run them. Psychiatrists, social workers and psychologists at the clinics provide care for about 3,100 indigent mentally ill patients in Ventura County each year.

“If this didn’t come together, we would be in a very bad position,” Schillo said. “We would be at the first board meeting in November deciding what we are going to cut. Because there is no doubt we would have to cut.”

The state has threatened to withhold the $5.3 million annual funding since June, when a state audit found mental health services have deteriorated so badly that the county no longer qualifies as a “model” system--a standing that entitles it to the extra funding. The loss in money equals about 10% of the Behavioral Health Department’s $50-million budget.

Auditors found mental health funds were being used to pay for unnecessary hospitalizations in a psychiatric wing at the Ventura County Medical Center, a finding the county has disputed. The state also found the role of psychiatrists has eroded over the years and that employee groups mistrust each other.

The state announced it would conduct an audit after state Sen. Cathie Wright (R-Simi Valley), who had voiced concerns over recent changes in the county’s mental health system, used her influence in the Legislature to demand an audit.

Wright said Wednesday the county is entitled to the money as long as it can comply with the state’s standards.

“If they do what they are supposed to do, they get the money,” she said. “But they’re going to have to sign a contract that is very explicit about what they have to do.”

*

For months the county has been battling the state to retain the funding. Flynn, along with Behavioral Health Director David Gudeman and county lobbyist Larry Siegel, met with state Mental Health Director Stephen Mayberg in Sacramento two weeks ago in an attempt to resolve the matter.

The county also filed an appeal of the state’s decision to withhold the money. Flynn said that appeal would be dropped if the state begins sending the money. As part of its agreement, the county agreed to hire a consultant for 90 days to guide the Behavioral Health Department as it continues to correct deficiencies, Flynn said.

Flynn said the county also agreed to meet a number of performance objectives, including showing it has reduced the number of days patients are hospitalized in the public facility’s psychiatric wing or is increasing the number of patients able to live independently.

Board Chairwoman Susan Lacey is working with state officials to identify and hire a consultant acceptable to the county and state, Flynn said.

Even as the county makes progress with the state, it is still battling federal officials concerning a separate review of medical and mental health clinics. The U.S. Health Financing Administration ruled in July that the county is no longer eligible for a higher Medicare reimbursement rate at 34 county clinics, a decision that could drain millions of dollars from the county’s treasury each year.

*

The county is appealing that decision and no movement is expected soon, officials said. Meanwhile, county lawyers are putting the finishing touches on a settlement with the Department of Justice concerning a lawsuit alleging the county has for years improperly billed Medicare for mental health services.

Supervisors agreed in July to pay $15.3 million to settle that lawsuit, initiated by a whistle-blower in the Behavioral Health Department. Schillo said he views the imminent agreement with the state Department of Mental Health as evidence the county is one step closer to righting its troubled Health Care Agency.

“I’m going to kiss that check when it comes in,” he said.