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House | March 4, 2015 | Chamber | Health

Full MP3 Audio File

Gentleman, If everybody will take a seat we'll get started in just a moment. This time we'll call the house committee on health to order. Like to begin by recognizing our house sergeants at arms. Today we have Young Bay, Bill Morris, and Jim Moran thank you all gentleman for the work you do for us everyday. We also have a couple of pages with us today, I'd like to ask you if you would to stand when I call your name. We have Lauren Trivet from Bladen county sponsored by representative Brisson and we have Drew West from Bukan county sponsored by representative Presnell. So welcome, hope you enjoy your week here at the general assembly and we're glad to have you in the health committee today. And I want to take an opportunity to welcome our members. This is our first meeting I guess the third time is the charm. We've been trying for three weeks, the weather cooperated today. And so anyway, I see a lot of familiar faces from the committee in the past and I see some new faces so welcome to the health committee I think we'll have a good year here. I am delighted to share the chairmanship of this committee with representative Brown, representative Byrd, and representative Lambeth. Representative Brown is here today do you have any comments to make? Okay. Well, anyway we look forward to a good session together. We have one bill on our agenda today. So representative Torbett if you'd like to come forward and present your bill. [Change Speaker] Thank you Mr. Chairman, members of the committee. The bill title of Men's School Health Assessment Requirement, I trust you all have had time to look through it. First thing I'll tell ya is it does no require the wearing of a motorcycle helmet during the process. But what it does do, section one of the bill clarifies changes that specify a parent guardian or person in local parentis is responsible for submitting the health assessment to school principal on or before the students fist day of attendance. The health assessment must be made not more than twelve months prior entry. Section one also requires a health assessment form to be permanently maintained as students official school record. Section two of the bill makes a conforming change to GS one fifteen C dash four O two B by adding the health assessment to the items required to be maintained the official school record. Effective date when it becomes law and applies to children entering public schools first time beginning in the year twenty fifteen dash twenty sixteen school year. The genesis of this bill came to my attention that it is required to have a full health assessment when entering kindergarten. But a child entering the system any other year than the year kindergarten is not required. So this simply means that if a child enters the system in North Carolina at any year after kindergarten, which is already required, that they too must have a health assessment. And I'll tell you the comments I've had about this bill. I've had about five comments and all of them in some shape form or fashion have been, we don't already require that? And that's been the comments. So with that very simple, I'll yield to any questions Mr. Chairman and thank you for the time. [Change Speaker] Representative Dobson. [Change Speaker] Thank you Mr. Chairman, one quick question if I can, is it already also mandatory that it be kept in the permanent record? [Change Speaker] That is correct. [Change Speaker] So this is just an addition if they didn't start kindergarten in future grades? [Change Speaker] That's correct. [Change Speaker] Thank you. [Change Speaker] Representative Lucas recognized. [Change Speaker] Thank you sir. President does this apply to students who transfer into the state, they've not been in school in North Carolina but let's say they were in South Carolina they received a health assessment there would this transfer into North Carolina? [Change Speaker] I'll have to yield to staff, my understanding is that it would but I'll yield to staff on that. [Change Speaker] Yes it would apply to any student that was coming into the public school system whether it was a transfer student or maybe someone who had been home schooled or for whatever reason was not in the public school system when they entered in kindergarten. [Change Speaker] Representative Lucas you have follow up? [Change Speaker] Follow up, yes. So I'm assured then that if they've had that assessment that it still maintains it's equity whether it's on North Carolina or elsewhere. [Change Speaker] Mrs. Johnson. [Change Speaker] If the individual was coming let's say in your example from South Carolina, if the had a health assessment that was conducted in the time frame required by the statute it would still be valid. If it was say five years old they would need a new one. [Change Speaker] Representative Avila. [Change Speaker] At the appropriate time Mr. Chairman, offer a favorable report motion [Change Speaker] I'll come back to you. And representative Pendleton.

JHTYKK [0:00:00.0] Mr. Chairman mine was the same as hers. [SPEAKER CHANGES] Representative Cotham? [SPEAKER CHANGES] Thank you Mr. Chairman, just kind of using my principle here from a high school, has there been any discussion about adding the immunization record as a part of the health assessment because that’s where especially when children are older in high school? We have a tremendous problem in hundreds of kids will not be in compliance with what the local school or state requires in terms of immunizations. So would that make sense to connect them? [SPEAKER CHANGES] Yeah, Mr. Chairman I would refer to staff. [SPEAKER CHANGES] The immunization certification is not addressed in the bill and that is a separate certification that get sent but this is just for the health assessment which is not, the vaccines are not included in that. [SPEAKER CHANGES] An answer of your question has been research at this time but it’s not part of this bill as a separate entity, thank you. [SPEAKER CHANGES] Representative Brown? [SPEAKER CHANGES] Thank you Mr. Chairman, I just wanna clarify, if I’m a child say in kindergarten I lived in ?? County, my family moves at grade five into Davidson, I have my assessment in kindergarten, if I stay into ?? it’s good, but if I move to Davidson it’s not good, I’m gonna have unless it was done year prior, I have got have it done again, is that correct? No, it’s gonna be good for both. [SPEAKER CHANGES] Excuse me! Mr. Chairman, Representative Brown once you had going to the kindergarten it’s become part of your permanent record and all that’s transferable. [SPEAKER CHANGES] Representative Lucas? [SPEAKER CHANGES] Thank you Mr. Chairman, Representative Torbett I just thought of an another question, we recognized that and I certainly concur with the spirit of this that needs to be done but in many instances we find students who will, or parents I should say will use the inability to pay for an assessment as a rational. We know that those who are on public assistance can get those assessments that way but we have some families that fall between the corrects, they don’t have health insurance and they are on public assistance. Is there any provision for ensuring that these health care cost will be paid for and if it can’t I guess another question would be can that be, excuse to keep students home? [SPEAKER CHANGES] Representative Torbett? [SPEAKER CHANGES] Thank you Mr. Chairman and thank you Representative for the question very well meaning, the same process that’s in place now, should that a curve going into the kindergarten level would be the same process in any other grade? [SPEAKER CHANGES] So any further questions from the committee? Seeing none, Representative Avila you are recognized for a motion. [SPEAKER CHANGES] Thank you Mr. Chairman, I make a motion that House Bill 13 will give a favorable recording, favorable report and refer to education K12. [SPEAKER CHANGES] The motion is made by Representative Avila for favorable report for House Bill 13 refers to Education K12. All in favor signify by saying aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All oppose no, the ayes have it, the motion carries, and seeing no further business before this committee the committee is adjourned. [SPEAKER CHANGES] Thank you Mr. Chairman and members of the committee. [0:05:00.3] [End of file…]

I understand we have a senate page, okay I have found it, Derria Thomas is from Kinston. Derria is sponsored by Senator Don Davis. I apologize I could not find your name there for a moment. I should have known it. The agenda has been published and we will stick to the agenda for today and we appreciate everyone being here during this roller coaster weather we're having outside. First item on the agenda is a presentation by Jeff Grimes from the program evaluation division. After Mr. Grimes presentation is complete Joyce Jones from the legislative draft division will also offer comments. So we invite Mr. Grimes, Mr. Grimes I believe you have some other members from PED with you and if you'd like to introduce them or I can have their comments as you go along that would be fine, your recognized for your comments. [Change Speaker] Thank you Mr. Chair. We also have Carol Shaw, Brent Lucas, and Sean Hamil from the program evaluation division team here today. My name is Jeff Grimes I'm the senior evaluator with the program evacuation division and today I'll present the findings and recommendations from the report entitled the department of health and human services should integrate state substance abuse treatment facilities into the community based system and improve performance management. This project is the result of the appropriations act of twenty thirteen which directed the study. To start out there are two primary components to the state system for public substance abuse treatment. The first I'll discuss is the alcohol and drug abuse treatment centers or ADAC's. There are three ADAC's in North Carolina, Julian F. Keith in Black Mountain, R.J. Blackly in Butner and Walter B. Jones in Greenville. The ADAC's provide twenty four seven in patient treatment for those with substance abuse disorder. Service include psychiatric stabilization detoxification, substance abuse treatment, and education and medical care. In fiscal year twenty thirteen, fourteen the three ADAC's combined operated a hundred ninety six beds they admitted three thousand eight hundred seventy five individuals for treatment and spent over forty six million providing that treatment. The ADAC's rely heavily on state general fund dollars to cover operating expenses. In fiscal year thirteen fourteen state appropriations covered ninety percent of all expenses while the other ten percent of expenses were covered through receipts. The federal program Medicare is the largest source of receipts at almost eight percent of the total. As you can see the ADAC's receive very little revenue from individuals paying out of pocket, from private insurance or from the states Medicaid program. The second component of North Carolina's system for public substance abuse treatment is the community bases system which is made up of nine local management entities slash managed care organizations or LMENCO's. LMENCO's are over seen by the division of mental health developmental disabilities and substance abuse services. And receives state appropriations to contract for substance abuse treatment in the community based system. LMENCO's establish networks of providers that purchase substance abuse treatment service from those providers. LMENCO's also have the responsibility for implementing a twenty four hour a day screening triage and referral process. Provide a monitoring utilization management utilization review and determination of the appropriate level and intensity of services for individuals. Cared for nation and financial management and accountability for the use of state funds. Before discussing each finding I want to refer you to side one of the hand out. Which is American society of addiction medicine continuum of care for adult substance abuse treatment. This continuum of care is a frame work created by the American Society of Addiction Medicine Center, or ASAM, and has been adopted by DHHS for use in placing individuals at the appropriate level of care for treatment. These levels of care are important throughout the rest of this presentation. On the left are the least intensive levels of care such as early intervention or out patient services and each level of care is associated with a number. On the far right are the most intensive levels of care with medically managed intensive in patient services being

Biased. These are services typically delivered in a community hospital, a psychiatric hospital and at the ADACs in North Carolina. One thing to emphasize, is that the ASAM continuum is about the type of setting for treatment. It does not dictate what particular treatment modality is used. So treatment modality is the specific type of therapy or approach to treatment delivered by a provider. The idea behind the ASAM continuum is that you can improve clinical outcomes and cost effectiveness by matching treatment setting to the needs of the individual, preventing undertreatment and costs of overtreatment. Our first finding is that three alcohol and drug abuse treatment centers operate with a high degree of autonomy, resulting in operational and treatment differences. We expected going into the project to see consistency across the three ADACs that would ensure uniform treatment across the state regardless of which facility provides that treatment, however that wasn’t the case and we did find several differences. In this slide, you can see some of the differences in operation and in treatment in the three ADACs. One difference is the Julien F. Keefe facility has roughly 40 more budgeted positions than the other two facilities even though the ADACs are all state facilities and provide the same level of care, Julien F. Keefe has a very different number of positions as compared to the other two. As a result, the other two facilities are relying more heavily on contractors to make up for the difference in state personnel. Next, you’ll see that RJ Blackley had about $900,000 more in expenses than the other two facilities. One final difference is that the cost per stay at Walter B. Jones is $10,998 is about $1,500 less than the other two facilities. The primary reason is that Walter B. Jones keeps patients for less time than the other two facilities. While we’re talking about differences in facilities and autonomy, it’s also important to mention that one potential result is overexpenditures. In the 2013 session, the General Assembly reduced ADAC appropriation by $4.9 million for fiscal year 2013-14, however the ADACs actually overspent by $5.2 million which means that even without the cuts they would have overspent. The way they attempted to meet the cuts was by eliminating a combined 44 beds from operation at the facilities and eliminating vacant positions. Ultimately the overexpenditures at the ADACs were covered by unused state appropriations at the Obery Neuromedical Treatment Center and then the Murdock Developmental Center which are also operated by the Division of State Operated Healthcare Facilities. Finding 2, separation of the alcohol and drug abuse treatment centers from the community-based system creates operational silos which impose challenges to utilization management, continuity of care and information management. In an important concept to discuss is the existence of structural incentives to promoting overreliance on ADACs. North Carolina funds the ADACs through an appropriation while also giving LMEMCOs separate funds to develop networks of providers to treat individuals. When a patient is referred to an ADAC, the ADACs are outside of the LMEMCO system and the LMEMCOs bear not cost for treatment at the ADAC and, in fact, when the LMEMCO refers a patient to an ADAC, that LMEMCO can avoid having to pay for treatment elsewhere. ADACs rely on state appropriations and have limited incentive to restrict utilization of services to only those individuals who need a high level of care because most of the cost of operations is already covered every year through state appropriations. Finally LMEMCOs don’t have much incentive to invest in community-based services that would be a substitute for ADAC services because then the LMEMCO would then have to pay for community services whereas they don’t have to pay for ADAC services now because the state is paying for those services directly, and in fact an LMEMCO has just an opposite incentive, to use as much ADAC services as possible because those services are essentially free to the LMEMCO and that if a given LMEMCO doesn’t use much ADAC services other LMEMCOs will be able to use even more. Because state appropriations primarily fund ADACs and LMEMCOs do not pay for those services, there is no payor who may question the need for an ADAC service or limit overutilization. One result is that you can find cases of prolonged lengths of stay at ADACs. The long

This case we identified was an individuals who stayed in an ADAC for 335 days straight. In total we identified 113 individuals with prolonged lengths of stay. Those extra treatment days for those prolonged lengths of stay cost the state more than $1.5 million during the nearly two year time period we examined. Another way in which the separation between the ADACs and the community based system causes problems is ensuring continuity of care. As discussed, the ADACs and community based system are separate components and with that comes challenges ensuring continuing care because it requires effective communication, information sharing and planning. Because substance abuse disorder is a chronic condition, after leaving an ADAC, an individual is likely to need further treatment at a lower level of care in order to promote long term recovery. For example, someone might leave an ADAC and continue treatment at a residential or outpatient facility. The Division of Mental Health set a goal that at least 40% of persons discharged from an ADAC receive community based followup treatment within seven days of discharge from an ADAC. This measure of followup treatment withint seven days is shown int he graph by ADAC by quarter. The reason this goal is in place is that we know from the literature that individuals benefit from continuing care in terms of improving long term treatment outcomes. As you can see from the graph, performance on this measure has been declining since fiscal year ’11-’12 and the most recent data shows an coordination among the ADACs and the NCOs falls well below the performance target. Finding 3: Separation of the alcohol and drug abuse treatment centers from the community based system limits North Carolina’s ability to address service gaps and manage costs. When NC transitioned to a managed care model for community based behavioral health, some of the expected benefits were a decreases in inappropriate use of inpatient care and in an expansion of the array of services provided at the community level. These expectations were not unreasonable. Managed care typically results in decreased utilization of expensive inpatient settings as some services are shifted to less costly residential or outpatient settings. In NC, ADAC utilization remains outside of the LME/MCO system, which has hindered the state’s ability to fully realize the benefits of managed care. In fiscal year ’11-’12, the ADACs made up 49% of non Medicaid general fund dollars expended on substance abuse treatment, which means that many of the state dollars for substance abuse treatment are outside of the managed care system. The closest thing that we have in NC to a more fully developed community based managed care model is something called the Piedmont Demonstration Project, which shows that changing the incentive structure and expanding community based services results in reduced ADAC utilization. Piedmont Behavioral Health was the pilot LME/MCO and served Cabarrus, Davidson, Stanly, Rowan and Union Counties. PBH has since merged with other entities to form Cardinal Innovations Healthcare Solutions, and is one of the nine LME/MCOs in the state. In 2003, PBH entered into a memorandum of understanding to begin receiving a per capita share of state institution funds. PBH began receiving 10.7 million based on its share of state psychiatric hospital and ADAC funding. PBH then had to pay for the use of the ADACs and state psychiatric hospitals when someone from one of the five counties went there, and the rate for the ADACs was $260/day. This arrangement remains in effect for just those five PBH counties in NC, and as you’ll see in a moment, it’s had a dramatic impact on utilization of the ADACs. This graph shows admissions to the ADACs per 100,000 North Carolinians. The statewide average in red, compared with the admissions from PBH counties in blue. At the time of the Piedmont Demonstration Project in 2003, PBH utilization of the ADACs was slightly below the state average with 36 individuals per 100,000 being admitted to an ADAC, compared to the state average of 42. By fiscal year ’12-’13, PBH utilization was down to 2.6 individuals per 100,000, while the state average was still 42.

Staff at PBH which is now Cardinal Innovations Healthcare Solutions, noted that one reason ADAC admissions are lower in PBH counties is due to the use of facility based crisis services which serve a need for local detoxification capacity and keep individuals from needing to go to an ADAC for detoxification. Cardinal contracts for the operation of two 16 bed crisis/detoxification facilties that serve the PBH counties. In addition, Cardinal reported to us having seven hospital detoxification providers that serve the counties and also paying for 300 individuals to receive treatment at a medically monitored community residential treatment facility in fiscal year 2012-13, which is level 3.7 on the handout of the American Society of Addiction Medicine Continuum of Care. In the report we tried to provide examples of alternative ways to serve individuals that an LMEMCO might use. Now, there’s no one size fits all alternative to serving everyone currently treated at an ADAC but I want to talk about an example of an individual who is in need of an ASAM 3.7 level of service, which is medically monitored intensive inpatient services. This is one level lower than ASAM 4.0, which is medically managed intensive inpatient services. ADACs admit and treat individuals at both the 3.7 and 4.0 levels. If an individual requires the 3.7 level, it would cost far less to treat that individual in the community-based system. So let’s start by looking at the average length of stay at an ADAC which is 16 days. Based on the cost per day in the last fiscal year of $771 a day, that stay at an ADAC would cost $12,336 for the 16 days. Alternatively, here is how that same level of care, 3.7, can be served in the community. First, the individual would receive facility based crisis services for detoxification. Facility based crisis is a 24 hour residential facility that provides detoxification and stabilization services. The average length of stay is five days for a cost of $1,500. The individual can then receive medically monitored community residential treatment services for the remainder of the time period at the cost of $3,003. This is a residential setting where there’s a medical or nursing monitoring and professionally directed treatment. In total the cost of the community-based services would be just over $4,500 compared to over $12,000 at an ADAC. Again, this example wouldn’t work for everyone served by an ADAC, but only in those in need of a 3.7 level. One final issue related to having the ADACs and community-based system separate is that this structure limits the ability of LMEMCOs to address gaps in the treatment services because the appropriations that fund ADACs are unavailable to spend at the community level to close gaps in treatment services. We found gaps in levels of care in the community based system where some LMEMCOs did not contract for any services at different levels of residential treatment. If the LMEMCO doesn’t have any residential treatment for an individual who needs it, the ADAC is often the next higher level of care and then policy dictates that the individuals get treated at the next higher level of care available, so having gaps in the community can lead to individuals going to an ADAC who wouldn’t otherwise require that level of care. This situation is inefficient because it would cost less to treat individuals in the community at lower levels if those services were available. The problem is perpetuated, though, because the community based system doesn’t have access to the dollar resources that’s appropriated directly to the ADAC. LMEMCOs don’t have the ability to allocate those treatment resources to where they are needed most, which could in turn prevent the need for individuals to receive treatment at the higher level of care, at the ADACs. Funding for North Carolina lacks a performance management system that tracks long term outcomes of public substance abuse treatment. We found that the existing performance management system in place emphasizes the tracking of processes and outputs rather than outcomes. Outcomes data would be useful in guiding the decision to improve the community based system such as determining the effectiveness of different providers, treatment modalities and LMEMCOs. In order for the Division of Mental

About the measurements and processes, outputs and outcomes. It must capture encounter level data. In July 2013, DHHS went live with NC Tracks, which replaced the Integrated Performance and Reporting System, or IPRS, which was the previous claim system for the division of mental health. As of August 2014, approximately 30% of total substance abuse treatment claims were being denied, which is much higher than the normal range of claims denials in the past. Even when reliable encounter level data was available, the existing performance management system emphasized processes and outputs rather than outcomes. Process and output measures are important because they can serve as guidelines for internal improvement, for example admission, treatment duration and treatment completion are all process and output measures, but they don’t actually tell you whether a person showed improvement over time as a result of treatment. There are substance abuse treatment outcomes that North Carolina could begin to use that would give the state a better way to manage public substance abuse treatment. These outcomes include reductions in substance use or abstention from use or improvements in personal health over time, improvements in social functioning over time and reductions in threats to public health and safety. An example of an important indicator would be looking at individuals who receive treatment and their ability to either obtain or maintain employment post-treatment. A robust performance management system would allow the state to evaluate different treatment modalities or different treatment providers to see which produced the best outcomes over time and the state could then devote resources to those providers or types of treatment that are most effective. And now our other recommendations. This report had two recommendations. Our first recommendation is that the General Assembly require DHHS to integrate the alcohol and drug abuse treatment centers into the community-based substance abuse treatment system. One of the things that we discussed in the report is that this is not a particularly new recommendation. In 1992 a Government Performance Audit Committee Report or GPAC recommended the state appropriations to the AEX be transferred to the community-based system and that the predecessors to the LMEMCOs be given the option to purchase services from the AEX. Then in 2001 in a report for the Joint Legislative Oversight Committee on mental health, developmental disabilities and substance abuse services by MGTO America, they recommended the state facilities become receipt supported, so in many ways this recommendation has existed for 20 years but has not been acted upon. If you look at the handout you have, it has an exhibit describing the AEX integration process that we recommended. The AEX would be integrated into the community-based system by transitioning AEX appropriations to the community-based system and requiring LMEMCOs to pay for AEX services when they contract with AEX. Because an immediate switch of all funding could negatively affect the availability of treatment services, we recommend a multi-year process which would start with one year of planning in order to allow LMEMCOs to develop plans for how they would spend reallocated AEX funding and to allow AEX time to plan to move to a receipt supported business model. After the planning year, AEX would have their appropriations reduced in 25% increments over a three year period and by the fourth year would receive no appropriations. At the same time, LMEMCOs would start to receive reallocated AEX funding in increasing increments of 25% and would receive the full amount of reallocated AEX funds in the fourth year. LMEMCOs would also begin to have to pay a portion of the cost of AEX treatment and by the fourth year would have to pay the full cost when they contract with AEX. LMEMCOs would be able to determine how they spend the reallocated AEX funding, but they would have to spend it on substance abuse treatment, either from community providers or from the AEX. Having this flexibility would allow LMEMCOs to determine how much inpatient level services they need to purchase relative to other levels of care and would allow them to contract with providers that would best fit their needs. AEX would have to adjust their operations based on contracts with LMEMCOs as well as other receipts such as Medicare, self pay and private insurance.

In order to ensure proper planning and oversight of the transition process we recommended the following time line. By February first twenty sixteen LMENCO's would need to submit plans to the division of mental health on how they plan to use reallocated ADAC funding. Two months later DHHS should submit it's own business plan for the ADAC's to the joint legislative oversight committee on health and human services outlining it's estimate for the demand for ADAC services from LMENCO's procedures for making operational adjustments based upon projected demand and the method for establishing rates for ADAC services. DHHS would also report annually to the joint legislative committee on health and human services and the joint legislative program evaluation oversight committee on October first from twenty sixteen through twenty twenty on the integration of the ADAC's into the community based system. And the use of reallocated funds by LMENCO's. The second recommendation is that the general assembly should direct the division of mental health developmental disabilities and substance abuse services to strengthen it's performance management system for substance abuse treatment by improving data collection and tracking long term outcomes. In order to ensure that North Carolina has effective substance abuse treatment services the general assembly should direct the division of mental health to develop a plan to improve performance management of the publicly funded substance abuse treatment system. The plan should identify specific long term outcome measures the division of mental health will begin tracking. Challenges with NC tracks that limit the ability of the division to implement performance management and proposed remedies. Data elements that would allow the division of mental health to improve the process for analyzing gaps in the community based system, steps for how the division can use long term outcomes in order to improve performance management, and time lines for all steps required to begin tracking long term outcomes. The division of mental health should consult with LMENCO's and other state agencies and divisions of DHHS in order to plan to integrate other administrative data into a performance management system. The division should submit this plan to the joint legislative oversight committee on health and human services by January fifteenth twenty sixteen. In summary separation of the ADAC's from community based system has created several problems and these limit the ability of North Carolina to address substance abuse treatment service gaps, provide a seamless continuum of care, and manage cost. DHHS should integrate the ADAC's into the community based system and improve it's performance management system by tracking long term outcomes. This concludes my presentation today, the full report is available online and includes a response from DHHS. I'd be happy to answer any questions now at the direction of the Chair. [Change Speaker] Thank you Mr. Grimes. Miss Jones from bill drafting is here to respond with a draft bill and we will hear here comments and then we will open up for questions at that time. Thank you. Miss Jones. [Change Speaker] Good morning Mr. Chair members of the committee. You have in your package house bill one nineteen as well as a bill summary. And the bill implements the recommendations that Mr. Grimes just discussed. I'm going to go through the bill analysis for you. Section one sets forth the definitions that apply throughout the bill. I will just call to your attention that on page one of the bill and line twenty nine there is a definition of a transition period and this is the period of time during which all of this transitioning of funds is to occur. It is a three year period that begins July one two thousand sixteen and it ends on June 30th two thousand nineteen. And during that time period the ADAC's are to be fully integrated into the array of publicly funded substance abuse services that are managed by the LMENCO's. Sections two through six of the bill implement recommendation one of the report. And in particular section two directs DHHS to prepare by April fist two thousand sixteen a three year transition business plan for integrating the ADAC's into the array of publicly funded substance abuse services managed by the LMENCO's.

It lists five mandatory components of the plan, and those are the LMEMCO's projected demand for ADACS services, both during the transition period and the first three fiscal years following full integration. The projected availability of ADAC services during this same time period. Procedures for making operational adjustments at the ADACS. A methodology for establishing and updating the rates to be paid by LMEMCOs for ADAC services. A uniform process for LMEMCOs to give prior authorization for ADACS to admit and treat individuals for whom the LMEMCOs will be financially responsible. Section three provides for the termination of all direct state appropriations for ADACS effective July 1, 2019, and instead reallocates these funds to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services for community services in order to allow the LMEMCOs to assume full responsibility for managing these public funds, including those delivered through the ADACS. To help the LMEMCOs do some advanced planning for assuming this enhanced management responsibility, the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services is directed to provide each LMEMCO with its estimated share of these fund reallocations by August 1, 2015, and to condition each LMEMCO's receipt of these funds on submission of a transition plan explaining how the LMEMCO will use these reallocated funds to increase capacity for providing the full continuum of substance abuse services. Section four imposes various requirements on the LMEMCOs to help them plan for and manage utilization and payment for ADAC services. Namely, it requires them to submit written transition plans to the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services by February 1, 2016, and those plans are to derive?? how the will be used. They need to share with the Division of State Operated Health Care Facilities by February 1 of each year their projected demand for ADAC services in the upcoming fiscal year. They must enter into a contract with the Division of State Operated Health Care Facilities by April 1st of each year for ADAC services it intends to utilize during the next fiscal year, and implement and enforce the prior authorization process established by the department. To help the ADACS become wholly receipt-supported, section five requires the ADACS to annually evaluate and adjust their operations to reflect the project demand for services and the availability for funding to meet the demand for services from direct state appropriations and estimated receipts from Medicare, Medicaid, insurance, self-pay, and LMEMCOs. Section six directs the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services to monitor important aspects of the integration process during the transition period so as not to jeopardize federal block grant funding and to ensure that under this new model the state will be able to offer all levels of substance abuse services. Section six also requires the department to report each October 1st from 2016 through 2020 on the status of fully integrating the ADACS into the array of publicly-funded substance abuse services managed by the LMEMCOs. And also it requires a breakdown of how direct state appropriations reallocated from the ADACS to the LMEMCOs have been used to purchase substance abuse services. And in accordance with recommendation two of the report, section seven directs the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services in consultation with the LMEMCOs and as needed other DHHS divisions, the North Carolina court system, and other state departments to develop and submit by January 15, 2016, a plan for a stronger performance management system that tracks long-term outcome measures for publicly substance abuse services. And the bill becomes effective when it becomes law. That concludes my comments, Mr. Chair. [SPEAKER CHANGES] Thank you Ms. Jones. Now we will open the floor for questions from members of the committee. Representative Brisson, co-chair.

Thank you, Mr. Chair. Mr. Grimes on, I guess it’s exhibit 19, the, I don’t know of anybody that don’t like the looks of the numbers, the cost, but I was just, and I may have missed it, you may have told us, the ratio of the patients coming from the ADAC treatments and the community-based treatments, do you have any kind of numbers on ratio of, you know, actually what the if we’re taking the people out of the circulation or how many of them is still staying in the circulation. I mean, if you’re coming back to the community-based treatments, if we’re not, they’re not getting the correct treatment and they’re right back and they’re constantly rotating through that, then, you know, it’s, I’m not sure that we’re getting the bang for our buck. So I wanna, in the drug, alcohol and drug, it seems to be that that’s what we’re doing with a lot of our patients. We bring them in, dry them out a couple days and they’re right back in the circle. We’re dealing a lot with the same patients, particularly in the local hospitals. [SPEAKER CHANGES] Sure. This example in exhibit 19 is really, it wouldn’t be so much leaving the ADAC and going to this, it’s how you could alternatively serve some of those 3.7 level individuals in the community rather than at an ADAC, and what we said is because ADACs are serving the 3.7 and 4.0 levels of care, we think that at least with those 3.7 there is a way to more efficiently treat them in a community-based setting when that is appropriate and when you do that you can save a lot of expense by sending them to a facility-based crisis service and then a more residential treatment service. As far as numbers on re-receiving treatment I don’t have any exact numbers. What the literature says is you want to see individuals going down that continuum of treatment over time, so they may be treated in ADAC. If they then get out of the ADAC and continue into treatment at, say, an outpatient setting, that’s considered a success. What is less successful is if you have someone who, say, was treated at an outpatient setting and their conditions worsens and has to go to an ADAC. We’re trying to move people down that continuum of care. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up. Go ahead. [SPEAKER CHANGES] I understand that, but I was just looking at, you know, program 16 day treatment. I’m just, I know if I was an MCO that I would certainly look at the bottom to begin with, you know, when you look at the dollars and as tight as dollars have been lately in particular, but I’m not sure how that this chart really gives us a good idea of costs because community based, the standard ADAC time is. Is that 16 day treatment, is that standard for those? [SPEAKER CHANGES] Yes, sir. The average length of stay across the three facilities is 16 days. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Some people stay a lot longer. [SPEAKER CHANGES] So you’re saying that the community-based treatments would be on a 16 day period too? [SPEAKER CHANGES] This was for purposes of illustration for someone, how you could treat them in the same timeframe. The LMEMCO may treat them over, say, a 14 day period. They may feel that a 30 day period is more appropriate. It really is gonna depend on what they feel are the needs of that particular individual. One point to make is that this sort of scenario isn’t something an LMEMCO is probably going to consider right now because if the LMEMCO pays for the scenario, goes for the scenario on the bottom they have to pay that full

cost. If they send the person to the ADAC, they're essentially paying nothing right now. So what we're saying is the current system incentivizes the LMENCO's to send folks to the ADAC's and we think the incentives are in place yield a much higher utilization of the ADAC's then you would see if you bring the ADAC's into the managed care system. Thank you. [Change Speaker] Co Chair Alva. [Change Speaker] Thank you Mr. Chairman, I have somewhat the same issue of using exhibit nineteen and basically clarify. Your statement was the chart shows a setting and not the modality of treatment. So what we are comparing here is the same treatment but different settings. In other words at the end of sixteen days that person would have gotten the same type of treatment regardless of either setting because that was predicated by their condition. Am I correct? [Change Speaker] Yeah, these are essentially the ADAC's setting versus the three point seven community setting. So that's the difference, it's the same number of treatment days, yes. [Change Speaker] Follow up. That really was not my question, I'm not concerned about number of days their there I'm concerned with the condition they will be in at the end of sixteen days and my question is would it be equivalent regardless of the setting? [Change Speaker] So the way our system is set up is it's levels of care you could actually receive the exact same treatment modality at an out patient at a residential at in patient so for example you've got a modality would be something like a motivational interviewing that's a type of modality. And what really drives the cost is not the modality it's the setting. So in the ADAC setting you've got psychiatrists you've got doctors nurses. In a more residential setting you've got physician monitoring and that's what leads to the different costs. The actual modalities delivered is going to be dependant on the provider. [Change Speaker] I'm not through yet. I guess that's what's confusing me. The question is if they're getting the same modality of treatment why don't we give the same setting for everybody rather than have the setting where they have physician supervision and one with a staff of psychiatrists and everything. What I'm trying to determine is where is the determination made for a particular person who comes in with a medical condition, substance abuse, who determines what they need in terms of modality? [Change Speaker] So the way it works in our system is that a clinician is going to make that assessment using the American Society Addiction Medicine criteria. And place them on that continuum of care. So that assessment could be done by the LMENCO it is also done by the provider as well. And also for example in an emergency room it depends where that person presents in the system. [Change Speaker] Follow up. It does in fact depend on setting and what type of need they have correct? I think is what I'm hearing you say. [Change Speaker] Can you clarify what depends. [Change Speaker] When you talk about puttin on this continuum of care and that goes from point five to four and you pick a point on there and that is a setting and they're going to receive a modality so there is a direct correlation between how they're going to be treated and where they're going to be treated. I was understanding you at one point to say it didn't matter and what I'm trying to clarify is in fact the setting does matter and determine where the need for the greatest settings would be. Is it because we don't have people that need four therefore we don't need that many beds in the ADAC side we need to move them more on the continuum of care because that's where more people

would be served. [SPEAKER CHANGES] So the setting matters in terms of sort of the intensity of the need of that individual. So they're going to get assessed on, I think, six different criteria and if the assessment determines that that person needs a 4.0 level of care, that's where it dictates they would be placed. The assessment may also, say, come out at 3.1. It may come out at 3.7. From that assessment, where they get placed is going to depend on availability. So one of the issues that you can find in our system is that someone may only need that 3.1, but if there's no provider in the community-based system to provide that 3.1, they may get bumped up to the ADAC, because it's the next highest level of care. [SPEAKER CHANGES] I understand. I guess my follow up. The question seemed to be you said the chart shows setting, not modality of treatment. And it's like they were separate from each other, when in fact they're not in terms of the treatment for the patient. Where they receive the treatment is tied directly to the type of facility they're going into. One final, I guess, question, comment. What bothers me probably more than anything else is, I don't think we have an idea what we're doing, who we're treating, who's coming in, who's going. Do we have any kind of idea similar to what we do on the medical side, knowing who the high fliers are in emergency room medically? Do we know that we've got a certain population that's a big part of this whole problem, and we're just recycling them? Because from your analysis and everything, probably data collection and analytics is near on nonexistent in terms of trying to figure out what we're doing and how well we are spending money. [SPEAKER CHANGES] I would defer to the division of mental health on, I mean, there certainly are folks who are receiving treatment and coming back again for treatment, but in terms of a percentage, I don't have that data, and I don't know if the department does. [SPEAKER CHANGES] Mr. Chair, if anybody's got a number, I'd be happy to hear it. [SPEAKER CHANGES] Mr. Rich, would you like to reply? [SPEAKER CHANGES] Senator Pate, I'm going to ask if you would to respond, who is with our division of state operated health care facilities. [SPEAKER CHANGES] Good morning. Jenny Wood, team leader for the alcohol and drug abuse treatment centers with DSOFT??. Our readmission rate amongst all three are generally about 3% or less. We have very low readmission or recidivism rate as some call it. We have teams in ADACS that when these high fliers are identified from the EDs or they keep circling back in, we have teams that bring LAMCO providers in and say, what can we do different so this person has a more successful discharge and they're not readmitted later. So better than the national average at 30 days of less than 3% readmissions. [SPEAKER CHANGES] Follow up, if I may? [SPEAKER CHANGES] One last follow up. [SPEAKER CHANGES] Do we have that same kind of measurement for all the different points of continue of care in terms of if they get a treatment and show up again? [SPEAKER CHANGES] I would respond and say one of the things that we are, I think we're in agreement with a lot of the conceptual part of this piece??. Sadly one of the things that we know that we want to do better is this tracking of individuals and that outcome data. So what happens for people if they want to leave ADAC and they go in the community, do we fall folks along? So that's part of what we're working on, and again we agree. But I think that's what we'll get to once we gather those kinds of tracking measures and outcome data ??. [SPEAKER CHANGES] Co-chairman Dobson. [SPEAKER CHANGES] Thank you, Mr. Chairman. Two quick questions if I may, and either to Mr. Rich or Mr. Grimes. The first question is, it seems that the recommendation is to move in the direction more in line with Piedmont Behavioral Health. Would that be fair to say? [SPEAKER CHANGES] Yeah. It's not exactly the same model as Piedmont Behavioral Health, but it is more, definitely more in line with that. [SPEAKER CHANGES] Do we have, and I know we have a lack of data and you just talked about that, but since 2003 do we have anything

empirical or otherwise that tells us that the care is at least as good at PBH as those not at PBH? [SPEAKER CHANGES] I'm happy to respond, and I think what we can tell you is that [SPEAKER CHANGES] Mr. Richard, go ahead. [SPEAKER CHANGES] I'm sorry. Forgotten the protocol. What we have is certainly information as Mr. Rine's presented in terms of the cost avoidance. What we can't tell you is that do we know that we have in the five, it's really those five counties that were the original PBH counties, that we have better outcomes for all people who may have substance abuse issue? And I think that's, again, that's the real issue about us trying to follow that data in a much greater way to make sure that we're looking at the outcomes across the system. I think we all recognize it's been a flaw in the way that we would have done this is that we haven't had a continuum in terms of the way that we've reviewed the information on outcomes and we're committed to make that happen. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] It would seem to me that we do need to be careful then to make sure that the outcomes are at least as good under this new model as they would be under the current model that we have before we move in that direction, before we even know that it's the right way to go. So I think we need to be careful about that. And second, would there be a role for ADAC at all under this new model? It seems to me that there's no question it would be more limited role, but would they even be able to, would ADACS even be able to be operational under this new model long term? [SPEAKER CHANGES] Mr. Rimes? [SPEAKER CHANGES] There's certainly a role for that level of care. That level of care's definitely needed in our system. And then, under this new model, the role of the ADACS themselves is going to be dependent on what the LMEMCO feels they needed within their catchment area. [SPEAKER CHANGES] Thank you, Mr. Chairman. [SPEAKER CHANGES] Co-chairman Hise. [SPEAKER CHANGES] Thank you, Mr. Chairman. I think in concept I think this is an incredible idea. I think most research I've read indicates that community-based settings have higher levels of outcomes and better services to the individuals and less recidivism than you have in these institutional settings. Where I have a concern in trying to get to the thought process of how this was built, and I know you're not a bill sponsor or those types of things or an advocate for the positions, but I will start with this. This four year transition is what I see as very problematic, where I start seeing problems, and when PBH went to it they didn't phase it in over four years. They picked a time that they're starting and moving forward. And it starts with, on slide number seven, when you reduce the department, the funding for the ADACS by 25%, this reduction here, if I'm not mistaken, was a 12% reduction, which was 4.9, and they still spent 5.2 million over their budget. So from a state, if we cut them by 25, how do we know they just don't spend that amount anyway, transfer it from some other area, and we're stuck? Now we're spending 25% more in the overall system. The other problem I have is for the LMEMCOs, year one, year two, you still have the same incentive system. They're still sitting there and saying, if I can transfer this to the ADAC, then I'm not going to have the full cost. But now for the community-based services I'm only getting paid 25% of the cost. And so they can put 75% of the cost onto the ADAC, so as you transition in it, you keep in the incentive to move individuals to the ADAC that's coming in. You may lessen it a little bit, but it's not until you actually transfer the funding completely that they have the actual incentive to say, let's treat everybody in the most cost-appropriate setting that they've done. That's what we do with LMEMCOs across the board. So could it be in addressing that, this four year transition that's coming over, why not just make them receipt-supported if that amount of funds are coming in to the state and it's appropriate to be in the ADACs? Why not make those adjustments to the single care? [SPEAKER CHANGES] So I guess I can try to walk you through our thinking on the longer transition period. One is that the department felt like they needed more time to begin to move

...for that different business model which is, which is receipt supported, which is a very different way to operate I think than, than they have been funded in the past. And I think you’re right, in your one, you’re only look at 25% and part of the rationale for that is just getting the LME/MCOs and the ADAC? adjusted to billing, to this idea of them being the payer, getting those systems setup. They’re certainly gonna have, still have an incentive to send folks to the AVAS because they’re paying 25% of the true cost as opposed to 100, but it’s beginning to make that transition in the system. What we also heard from LMECOs when we talked to them was that they felt they needed some time to build up that capacity in the community, so they’ve got to go out and develop, find providers, develop contracts. The providers may have to build or renovate facilities, and they felt that that would take time, and so they wanted some time and certainty in this sort of transition. So that’s, that’s how we ended up at the four year period. Obviously, there’s other ways you can do it though. [SPEAKER CHANGES] Paul. [SPEAKER CHANGES] And when you get to the four year period in which these are completely receipt supported, what was the rationale for continuing to be a state institution when it is a service provider that’s fully funded outside of state funds, versus allowing the LME/MCOs to run the facilities or have a private entity owner run these facilities? [SPEAKER CHANGES] I guess my response would be that that’s certainly an option. The reason why we didn’t discuss that option was we found the problem really to be that these ADACs are outside of the community based system, and so our recommendation was to integrate them. Obviously, who runs them or how that works is another consideration, but it wasn’t part of, part of our recommendation. [SPEAKER CHANGES] Mr. Chair. [SPEAKER CHANGES] Let’s ask Mr. Turcotte to make some comments. [SPEAKER CHANGES] Thank you, Mr. Chairman. I’m John Turcotte, director of the program evaluation division. Logically, Sen. Hise didn’t get to the point where it is a receipt based system, then you could compare their cost per patient day to other alternatives. Now, in this state we do not have a process of doing the appropriate analytics and planning for outsourcing. And so if the system were there, if the state had that system and it was built in, there would be a way to easily decide who should be the provider of private sector for profit provider, non profit provider or some alternative to state agency. The federal government has a list, the call it the A-76 process where when you get to that point where you have a receipt based system that is mechanically an output process, and what you do is you get an analysis called the most efficient organization, and then you get the government entity to propose can they do that. Or you get alternatives from other providers. But right now, the state doesn’t do that. Everything is done ad hoc when you get there, and outsourcing decisions aren’t always made rationally, so you are correct logically, but until the state of North Carolina gets that developed, it’s going to be very difficult for any state agency to undergo that kind of transition. [SPEAKER CHANGES] Mr. Richard. [SPEAKER CHANGES] Thank you Sen. Pate and Sen. Hise, I appreciate your conversation. I think part, part of the reason why we wanted a period of time for transition and again, the idea of creating ?? financial incentives are things that I think conceptually we all agree with is that as a, as a state agency and running the safety net program, remember, it is that for so many citizens across the state, we operate in a different environment. We operate in an environment, you know, of state employees that it’s difficult that we can’t move in and out of that number of people that are available.

We have to have that workforce ready. We don’t have the same business tools that a private organization would have, but there are ways that we can run more efficiently and respond to the market changes. That’s part of the reason why we want this time, is because I think we can make a reasonably good business case about how we manage it that way as an organization. Now, obviously the future is up to the governor and you guys in terms of how we go forward, but to try to do something in year one that begins to take that money out that quickly, it is very difficult for a state facility to respond that rapidly in terms of making those changes that we need to make to address that, and that really is our view of how we have to make this transition. Again, we’re committed to whatever comes out of this process that we’re gonna make work, but there are some difficulties in managing a receipt-based system this way, and just one comment about the PBH issue is that the one difference in the way the PBH worked is that that was a very small amount of money in terms of system wide, so when you’re talking about the entire, almost the entire receipts for those ADAC, it’s a little bit more difficult to manage it that way. [SPEAKER CHANGES] Members, I’d like to interject at this time. We have to be out of this room, we have to adjourn in ten minutes’ time so I’ve asked Mr. Richard if he will make his presentation, we’ll reschedule that for another time. We still have five members who have questions and I will go ahead and take those questions, but at ten minutes of we’re going to have to gavel ourselves out of here. [SPEAKER CHANGES] Mr. Chair, choice. [SPEAKER CHANGES] Miss Jones. [SPEAKER CHANGES] I did just wanna point out that the bill does not include the specific amount of the percentage reductions to the ADACs or the reallocations to the LMEMCOs for each year of the transition period as was recommended in the PED report. [SPEAKER CHANGES] Co-Chairman Tucker. [SPEAKER CHANGES] Thank you, Mr. Chair. Yeah, I don’t know if time’s gonna be adequate. First of all, question, Mr. Richards, did I understand you to say that we did not have the tracking measures required as far as evidence-based outcomes. I know we have, the young lady next to you said as managing she talks about a 3% but we don’t have tracking measures for long term outcomes for these people who go to the ADACs currently? [SPEAKER CHANGES] Senator Tucker, what I would say is that what we have is that we have systems that are two separate systems essentially. They use a similar platform, but in the ADACs we have one system and our community system’s different and what we haven’t been able to do well yet, now there are some cases where we do do that follow along, but it is not consistent across everybody that goes to ADAC to where we know exactly what happens long term when folks are in the community or frankly what has happened to people as they get to the ADAC in most of these settings. So if somebody’s been engaged with an LMEMCO providing substance abuse services to begin with and they show up at an ADAC, we’re not able to necessarily find out what happened long term once they leave that ADAC and continue down services, so it is absolutely a flaw in our system. We’re gonna fix that. We have to make it correct. [SPEAKER CHANGES] Mr. Chair, a couple follow ups. Is that okay, sir? [SPEAKER CHANGES] Please make them time [??] [SPEAKER CHANGES] I’ll do my best. So you’re saying we’re making a $46 million a year expenditure in ADACs and we really don’t know long term how effective they are. Is that what you’re saying? [SPEAKER CHANGES] I don’t think I’d say it that way, Senator. I think we know that the ADACs have been effective. We recognize that treatment. We have some individuals that we do follow longer. We have privately done. What I would say to you is what we don’t have is everybody who’s gone through those ADACs and what has happened to them once they go in the community and that’s what we have to get to. [SPEAKER CHANGES] Okay. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] If they’re on this, you know, it’s obvious that we have issues in efficiency, $3,500-4,000 versus $10,000-12,000 a patient if that’s what I saw here. Much like the LMEMCOs when we started out in 2011, it can be an evolution. I concur with Senator Hise that we all put in year two that the LMEMCOs have skin in the game with costs and they’ll begin to work together to make this evolve and to do what needs to be done. If we do community-based treatment moreso, which works in my area, Mr. Grimes, would

There be a consideration for a closure of ADAC? because there would not be a requirement for those beds because community based outcomes are as good or better. [SPEAKER CHANGES] So in creating the incentive for LME/MCOs to find the necessary level of care for their individuals, we expect there to be less demand for that highest level of care because right now, all of the incentives are to send people to that highest level because it’s already paid for through the ADAC?. So I think we expect less demand for that highest level. That’s what you’ve seen in other states that have gone towards that more fully managed care integrated model. We don’t know how much less demand you’ll see over time and what the impact would be on those facilities. The way we’ve tried to address it at least in the recommendation we made is that I think it’s every February, the LME/MCOs have to report to the department how much they anticipate using from that AVAC in the upcoming fiscal year. And we would expect then the department to plan on how to best allocate their resources, which could include consolidating facilities, for example, to meet that demand. So we’re trying to help the LME/MCOs over time better establish what they think the demands are for the various levels of care, communicate that to the department and then give the department some time, hopefully, to then manage that reduction in demand. [SPEAKER CHANGES] Mr. Chair, thank you, sir. [SPEAKER CHANGES] Thank you, Sen. Tucker. By share on Pendleton. [SPEAKER CHANGES] Mr. Chairman, I just want to make a comment. Is that okay, sir? [SPEAKER CHANGES] If you ??, yes, sir. [SPEAKER CHANGES] I am very concerned about this. The general assembly since 1974 has wreaked havoc on our mental health programs and our citizens And what I’m mainly talking about is closing so many in-patient site beds. Look at the growth of our population and what the beds are. Within a mentality that so many people leave, that just about everybody can be treated in the community center, but you have to stabilize those people first. I served on the Wake Med Board for a long time. They are totally clogged with people with psychiatric problems, so they can’t get them into psych hospitals, so what I’m worried about is hope to God that you don’t close any of these 196 beds. The last thing we need is to close anything with these beds. That’s an average of two per county. [SPEAKER CHANGES] Sen. McKissick. [SPEAKER CHANGES] I have a couple of questions and--with you, Mr. Rimes?. First of all, this 3.7 level care which is shown on Exhibit 19, of the number of people going to AVACs at this time, what would you assume is the percentage overall of that population that required that 3.7 level of care? I’m trying to get some sense as to what percentage of that population is being served by AVACs, 60%, 70%, 80%, would then be served by this alternative community based alternative? Because if you get down into the numbers in terms of what the true savings might come out to? [SPEAKER CHANGES] I wish we could give you an exact percentage. The AVACs do not track that data and so we don’t know what percent are 3.1, 3.5, 3.7, 4.0. The data is just not there. It’s not tracked systematically by the AVACs. If you are to look at the PBH model, you’re seeing a very large percentage of those folks served in the community through PBH, but we don’t know if that’s a representative example or not.

May not ever come to fruition if we don’t have some numbers that can be disaggregated about the number of people that are going to ADAC today that can be served by this new model. I mean it’s a, I won’t call it a fatal flaw, but it’s certainly a material and significant number that needs to be able to be estimated to know if we are gonna get what we hoped to achieve because you’re still saying that ADAC will continue to exist underneath this scenario that you put before us today. [SPEAKER CHANGES] I guess one point I wanna make is that under the current incentive structure the ADAC, they have an incentive to fill up the beds regardless of the particular level of care, so for example, if they started turning away everyone who had a low need and those beds went empty that’s not gonna look good in terms of their capacity, so the incentive structure in place is to fill them up. I don’t think what we’re saying is that there’s a net savings from this. What we’re saying is that if the LMEMCOs choose to treat those individuals in the community rather than sending them to an ADAC, it should be likely more efficient and so then you’re actually gonna see more treatment available, perhaps longer or more individuals served, so the concern over reduced capacity at the ADACs, you’re actually going to see more capacity in the community and in fact the LMEMCOs actually have to spend that money on substance abuse treatment, so if they’re not spending it at the ADACs, they’re going to be spending it in the community and when they do that we would actually expect them to be able to serve more individuals rather than less. [SPEAKER CHANGES] One last quick question. [SPEAKER CHANGES] Senator McKissick, I’m sorry. We have to move on here to questions from other members who might not have a chance to speak yet if you yield. [SPEAKER CHANGES] I will, Mr. Chairman, I simply ask that in the future we try to apportion time in a way that members will have an equal opportunity to ask questions instead of simply the co-chairs and vice-chairs. [SPEAKER CHANGES] Noted. Senator Robinson. [SPEAKER CHANGES] Thank you, Mr. Chair, and I’ll make it quick. I first wanna say that I believe that this is a broken system and I’ve had that opinion for a long time in terms of knowing that people in communities are not getting the treatment that they need and not having real outcome measures in terms of where, you know, the services ought to be in terms of transitioning people down. My question real quick is what do you consider capacity in terms of community-based capacity right now if we were to allow the LMEMCOs to begin to use community-based to provide services for the individuals as we transition down. I guess I’m making a little assumption that you’re gonna spoil this, but what do you consider current capacity? I know some of those facilities earlier were closed. What is capacity at this point in terms of being able to provide services within community-based service? [SPEAKER CHANGES] I think the capacity varies depending on what level of care we’re talking about. One of the things we pointed out in the report is we’re not seeing a lot of capacity at that residential level of treatment and that’s the next lower level than an ADAC and again, we think we’re seeing more folks go to the ADAC because that capacity at the residential level is not adequate in the community. So for example, we pointed out in the report there’s at least a few LMEMCOs that don’t have any providers at that 3.7 level and we don’t think we’re gonna see them develop any of those providers until we change the incentive structure by bringing the ADACs into the managed care system because right now the LMEMCO has a limited pot of resources and as long as they can send that person into the ADAC, they don’t have to pay for it and they can use that money to treat other people at a lower level. So by bringing all of this under the LMEMCO, we think that we’re gonna see them making more integrated decisions on how to build out capacity throughout the levels of care. [SPEAKER CHANGES] Members, it’s time

For us to adjourn, I'd like to thank all of the presenters. Mr. Richard, thank you very much for agreeing to reschedule your remarks. This meeting is adjourned.