Oakland officials applaud court ruling on privatizing state mental-health services – The Oakland Press

A Michigan Court of Claims judge has denied the state’s bid to dismiss a lawsuit by several county community mental health agencies over attempts to privatize their services.

Oakland County was not part of the lawsuit, but the county’s community mental health officials said they are cautiously optimistic about the ruling.

Judge Christopher P. Yates wrote in a 19-page opinion last Thursday that the state’s request for proposals for Prepaid Inpatient Health Plans violates state law by excluding the CMH’s current service providers from doing the same thing under the new proposal. The services involve $5 billion to $6 billion in expenditures statewide, most of it via federal Medicaid payments.

“The RFP (request for proposals) bars successful bidders for PIHP roles from paying CMHSPs (Community Mental Health Services Provides) for services provided through contracts with service providers,” Yates wrote. “This conflicts with numerous provisions of the Mental Health Code, which recognizes that CMHSPs must provide certain services and ensure recipients of those services receive various rights either directly from the CMHSPs or through contracts with other service providers.

“The Court hereby issues a declaratory pronouncement that the RFP, as drafted, impermissibly conflicts with Michigan law in numerous respects, especially insofar as the RFP restricts CMHSPs from entering into financial contracts for the purpose of funding CMHSPs’ managed-care functions.”

The state proposed consolidating the existing system from 10 to three regions statewide. Currently, separate entities operate in Macomb, Oakland and Wayne counties.

The Detroit Wayne Integrated Health Network in Wayne County has an approximately $1 billion budget and serves about 123,000 children and adults. The Oakland County Health Network has a budget of roughly $440 million and serves about 30,000 people. Macomb Community Mental Health last year served 18,425 people operating on a $319 million budget.

The Community Mental Health Association of Michigan, which along with individual agencies and many other county and regional officials oppose the state’s attempt, applauded the ruling.

“We are pleased that the Court recognized fundamental inconsistencies between the state’s attempt to bid out the management of Michigan’s public mental health system and Michigan law,” the association said in a written statement. “Judge Yates’ questions and observations in the opinion underscored his substantial concerns relative to how the RFP violates the Michigan Mental Health Code and the statutory framework governing Michigan’s public behavioral health system.”

Bids were accepted last fall with the new system to start next Oct. 1, the start of the next state fiscal year. Meanwhile, a new administration will be taking over state operations next Jan. 1 following the November gubernatorial election.

Macomb County Executive Mark Hackel said he was happy with the ruling because the state’s RFP didn’t allow enough time for existing agencies to adapt to the proposed changes.

Oakland County Executive Dave Coulter had no comment about the ruling.

Oakland Community Health Network Executive Director and CEO Dana Lazenby said she’s waiting to see the state’s new RFP, but she has some concerns about how the new version will affect the county’s $440 million budget.

Depending on how the state rewrites the RFP the money intended for the Prepaid Inpatient Health Plans budget as it currently exists could go to a different state contractor, including a regional entity, Lazenby said. If the state cuts Oakland’s community mental health network out of the bidding, the money needed to operate, manage the provider network and provide services directly as a state-sanctioned crisis system would disappear, leaving current clients scrambling, she said.

Lynn Sutfin, spokesperson for the state Department of Health and Human Services, which is heading the privatization, said officials are reviewing the opinion.

The state could appeal and seek an expedited ruling.

Community mental health agencies provide services for those with mental health issues, developmental disabilities and substance use disorders, with some 95% of the services paid by Medicaid.

State officials say expanding its request for contractors to include outside private providers will improve service quality, increase accountability and enhance administrative efficiency across the system. Sutfin previously said the department is committed to “ensuring that Medicaid beneficiaries in Michigan have timely access to high-quality behavioral health care services.”

The Macomb and Oakland agencies have combined resources to submit a bid to provide the services for one of the three regions.

Macomb CMH officials said in a statement: “We appreciate the Court for its thorough review and recognition of the legal and operational concerns highlighted in the bid-out requirements, particularly regarding their impact on the Michigan Mental Health Code. These concerns could have hindered our ability to fulfill our statutory obligations, including delivering comprehensive services, protecting the rights of those we serve, and managing essential mental health and substance use disorder services. As we await further decisions from the MDHHS, we remain dedicated to providing high-quality, person-centered care to individuals and families in our community.”

Judge Yates also writes in his opinion that he will give time for the state to potentially revise its bid package. He says he “will not yet issue injunctive relief that directs defendants to amend or pull back the RFP. Defendants must decide, in the first instance, how to address the conflicts between Michigan law and the RFP that the Court has identified.”

Hackel said the ruling is good “only in that we were very concerned about what the state was doing and not really having enough information.”

State officials’ assertion that they conducted a survey and made the decision based on complaints, “wasn’t enough,” Hackel said. “No system is perfect, whatever you’re talking about, government service, whatever (is) being provided. There’s always room for improvement.”

He’d rather state officials work with county and regional providers to address any concerns.

Lazenby said regardless of the state’s new RFP, services will remain the same throughout the end of 2026.

She said it’s important for people to know that local community mental-health agencies are governed by community boards and county officials, but local CMHs are governed by community boards and county officials and that large regional bidders may not maintain that local oversight or responsiveness.

If the state’s new RFP still shifts control of funds and contracting away from the county agencies, services affected could include crisis intervention, school-based mental health and autism support, among other programs, would have to be run by new entities or subcontracted to others.

In the end, she said the goal of community mental health agencies is to serve people in a consistent manner.

The state could rewrite its request to recognize Michigan’s legal requirements for community mental health agencies or redesign the RFP without that aspect, which could result in future lawsuits. Or the state could pursue changes in the law that would open the market to large regional providers, which Lazenby said would take time and not solve immediate issues.

— Oakland Press journalist Peg McNichol contributed to this report.