Editorial: Feds make a hash of state’s mental-health system

An obscure federal auditing issue may require the state to quickly tear up its outpatient mental-health system.

Seattle Times Editorial

THE U.S. Centers for Medicaid and Medicare Services informed the state of Washington that the state’s outpatient mental-health system violated federal procurement laws, as articulated in OMB Circular A-87.

Hope that didn’t lose you. That accountant-speak is bone-dry.

But the consequences of the July 5 letter are huge, and will require immediate, focused attention by state officials and lawmakers.

The letter potentially requires Washington to tear up a two-decades-old county-based mental-health system and open it to competitive bidding. At more than $750 million a year, it would be one of the state’s largest open bids ever for a state service, and would have broad impact on more than 135,000 mentally ill people served by the system.

All of this is just potential, because the state Department of Social and Health Services and attorney general are picking apart the legal reasoning and weighing an appeal. If not, the state needs to start responding within 90 days.

The federal agency’s letter is odd because it isn’t based on the quality of care, which is an open question. Its objection involves the state’s capped payments to county-based Regional Support Networks, and whether those payments should be open to bidding. Again, bone-dry stuff.

This objection is doubly odd because federal regulators have signed off on the structure of Washington’s outpatient system since the early 1990s. This smacks of federal bureaucracy at its worst.

But if the agency’s objection holds, the Department of Social and Health Services needs to immediately work on Plan B, involving open bidding or an even more complicated process of folding the publicly funded outpatient system into existing health plans. This is a huge time-suck for mental-health staff knee-deep in an underfunded system, and also grappling with the Affordable Care Act’s Medicaid expansion.

Ultimately, the Legislature would need to act. A change this big should require extensive input from mental-health advocates, patients, providers, administrators, insurers and law enforcement. All within the next six months.

What a mess. To the federal auditor who settled on this issue, thanks for nothing.