Medicaid Payment Woes Plague Idaho Mental Health Service Providers

Aug 25, 2014

The state’s effort to rein in Medicaid costs has created deep friction between small businesses that deliver behavioral-health services to Medicaid patients and a new contractor hired to manage them.

Service providers across Idaho have raised complaints over the last 11 months that the contractor, Optum Idaho, a unit of United Behavioral Health, has created red tape and cut services needed by at-risk patients.

Now providers in the Treasure Valley have raised another complaint: Optum isn’t paying them promptly, putting their businesses’ survival and employees’ jobs at risk. 

Optum says it has fixed a glitch that resulted in tiny claims payments to the companies, which provide counseling and other behavioral health services to low-income and disabled adults and children on Medicaid.

Optum says it erroneously sent small checks totaling amounts like $.05, $.07, or $.11 starting Aug. 1 to providers who care for Medicaid patients who need behavioral-health treatment.

“[We] apologize for any inconvenience caused by this temporary error, and we invite any provider with concerns or questions to call Optum Idaho,” Optum said in a statement.

But some providers say the problem actually began since last September, when Optum took over management of Idaho’s behavioral health system within Medicaid.

Two of the Treasure Valley’s largest mental health care providers for Medicaid patients say these tiny payments have recurred throughout Optum’s first 11 months in Idaho.

Optum hired to fight waste

Idaho spends $10.5 million a month on average for outpatient behavioral health, mental health and substance-abuse programs for adults and children on Medicaid. Optum can keep up to 15 percent of that for administration, the state says. Lawmakers approved the managed-care system in 2013 as a way to control costs and boost efficiency.

“We had one situation not long after Optum came on board where they paid a wide range of codes at one penny per claim when the claims were as much as $200 or $300,” said Tami Jones, the CEO of Idaho Behavioral Health in Boise. Each mental health service or procedure has a code number.  

“Every single service we've provided, we've had at one time or another a situation like this, where they've paid the wrong amount, and it's always been a much smaller amount like 11 cents on a $100 claim,” Jones said.

Remittance documents from Optum’s parent, United Behavioral Health, to Boise’s Access Behavioral Health, show payment errors dating to October.

“They’ve told providers they don’t know why it’s happening, and when it’s going to be fixed, and they have no idea when we’ll start seeing checks paid at the regular amount,” said Access owner Nikki George.

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Full payment comes a month or more later

In George’s case, Optum Idaho has paid the small remittance within the 30 days its state contract requires. Then, the balance of the claim is paid weeks, sometimes months, later.

For example, Optum sent a remittance payment of $0.09 on Nov. 5, 2013, for services Access Behavior Health performed on Oct. 23. The $82.77 claim wasn’t paid in full to Access until Dec. 3.

“Whatever we get from Optum is the money we directly use to pay our employees,” George said. “And if we send in a claim for $60, we’re paying our employees $40 of that, and if we only get 5 cents, we don’t have any money to pay our employees.”

For patients of Access, services haven’t been affected.

“We’re working for free,” George said. “When Optum has stopped paying claims, or paid pennies per claim, we’ve taken out loans in order to continue to pay our employees and continue to provide services for clients, so our clients won’t be impacted.”

But that’s not a sustainable way to run a business, George said.

State to provider: You can sue if you want

George has filed formal complaints with Optum and has made the Idaho Department of Health and Welfare aware of the billing issues.

The Health and Welfare Department says Optum is doing a good job, and it has no plans to fine or sue Optum over the payments issue.

In a recent email exchange with George, Health and Welfare’s Division of Medicaid Contract Monitor Carolyn Burt told her, “As a network subcontractor with Optum, if the dispute and resolution process identified by Optum are not [meeting] your agency’s expectation, your next option is that you may decide you need to take legal recourse to help with the resolution.”

George says she’s given a lot of thought to suing Optum, but for now has concluded her small company wouldn’t stand a chance against the corporate giant.

Optum Idaho has said of its most recent glitch that 29 of 1,725 providers have received the tiny payments, affecting less than 1 percent of total claims made during the week of Aug. 11.

The company says it is operating well within its state contract, which requires Optum to pay 90 percent of claims “on time and accurately within 30 days.” An Optum spokesman said in an email that the company is exceeding that requirement with a 99 percent accuracy rate. The Department of Health and Welfare agrees.

Providers have said Optum is failing in its duty to Idaho mental health providers and Medicaid recipients. Among their complaints are cutbacks in community-based rehabilitation services, formerly known as psychosocial rehabilitation. Idaho Psychiatric Rehabilitation Association chairwoman Jodi Smith told the Post-Register in Idaho Falls that Optum has cut hours for children with ADHD and other behavioral issues. Providers say cutbacks will lead to increased hospitalization rates for Medicaid children.

Optum says community-based rehabilitation is not proved to be effective in treating some children's disorders, based on national guidelines. Optum says evidence-based services for children have increased, use of individual therapy is up 30 percent, and use of family therapy has tripled.

State: Problems are common in a major transition

The department’s behavioral health administrator, Ross Edmunds, said glitches are to be expected as the state transitions from fee-for-service to managed care through Optum.

“I would suggest to you that every single state that has implemented managed care in their Medicaid benefit has experienced challenges in those first couple of years,” Edmunds said. “We were told by Optum, and many other people who do the same thing: Expect challenges and problems in the first few years.”

Edmunds believes those challenges will be worth it in the long run.

At Idaho Behavioral Health, Tami Jones says her company has had to add people in its billing department just to ensure they’re getting accurately paid by Optum. Like George, Jones has taken out lines of credit to stay in business.

Karen Canfield removes a memento from her office wall during a day of packing in preparation to move after selling her Boise behavioral-health business, Clearwater Rehabilitation. Canfield says Optum's Medicaid payment delays contributed to her losing about half her staff and deciding to sell to another provider.
Credit Kyle Green / Idaho Statesman

“This is really hurting the smaller agencies where they don't have the resources available to increase their billing department,” Jones said. “The mom-and-pop shops where mom's doing the billing? She now has no time to go out and see clients, because she's having to spend all of her time chasing the pennies.”

One Boise agency closes its doors

Small claims payments from Optum were one reason Clearwater Rehabilitation in Boise cited for going out of business recently. Owner Karen Canfield said she took out two lines of credit over the last 11 months in hopes of paying her bills while waiting for Optum to reimburse claims.

“And then when the reimbursement wasn’t coming in to pay those lines of credit, plus make rent, plus make payroll, [it was] beating a dead horse,” Canfield said. “How am I supposed to run a business?”

The claims payment issue is reminiscent of when Molina Medicaid Solutions took over Idaho’s Medicaid payment system in 2010. The California-based company delayed payments to health care providers working with Medicaid clients. Some Idaho providers who went two months without payments were forced to close.

“This mess makes Molina look like fun,” said Jones, who is also a member of Optum Idaho’s advisory board. “I understand the struggles that they've had coming in and learning a new system. But what we're seeing here is a disregard for providers and more importantly a disregard for patients.”

This story is a collaborative reporting effort by Boise State Public Radio and the Idaho Statesman.

Find reporters Emilie Ritter Saunders and Audrey Dutton on Twitter @emiliersaunders, @IDS_audrey