GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	1 

SENATE BILL 599

Short Title:  'Pioneer' Mental Health Plan.	(Public)
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Sponsors: Senators Walker; and Forrester.
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Referred to:  Children and Human Resources.
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March 29, 1993

A BILL TO BE ENTITLED
AN ACT RECOMMENDED BY THE MENTAL HEALTH STUDY COMMISSION TO INCORPORATE INTO THE GENERAL STATUTES THE FUNDING POLICIES AND PROCEDURES ADOPTED BY THE GENERAL ASSEMBLY AS THE "PIONEER FUNDING SYSTEM"AND IMPLEMENTED THROUGH A PHASE-IN SCHEDULE IN THE FORTY-ONE AREA MENTAL HEALTH, DEVELOPMENTAL DISABILITIES, AND SUBSTANCE ABUSE AUTHORITIES.
The General Assembly of North Carolina enacts:
Section 1.  (a)	G.S. 122C-3 is amended by inserting the following new subdivision to read:
"(20a)	'Local funds' means fees from services, including client payments, Medicare and the local and federal share of Medicaid receipts, fees from agencies under contract, gifts and donations, and county and municipal funds, and any other funds not administered by the Division."
(b)	G.S. 122C-3 is further amended by inserting a new subdivision to read:
"(26a)	'Other recipient' means an individual who is not admitted to a facility but who receives a service other than care, treatment, or rehabilitation services.  The services that the 'other recipient' may receive include consultative, preventative, educational, and assessment services."
(c)	G.S. 122C-3 is further amended by inserting another new subdivision to read:
"(35a)	'State resources' means State and federal funds and other receipts administered by the Division."
Sec. 2.  G.S. 122C-143 is repealed.
Sec. 3.  Part 4 of Article 4 of Chapter 122C of the General Statutes is amended by adding the following new sections to read:
"§ 122C-143.1.  Policy guidance.
(a)	The General Assembly shall, as it considers necessary, endorse as policy guidance long-range plans for the broad age/disability categories of persons to be served and the services to be provided by area authorities.
(b)	The Secretary shall develop a payment policy that designates, within broad age/disability categories, the priority populations, based on their disability level and the types of service to be supported by State resources.  The Secretary shall review the Department's payment policy annually to assure that payments are made consistent with the State's long-range plans.
(c)	The Secretary shall ensure that the payment policy provides incentives designated to target resources consistent with legislative policy and with the State's long-range plans and to promote equal accessibility to services for individuals regardless of their catchment area.
(d)	Upon request of the Secretary, each area authority shall develop, revise, or amend its local long-range plans to be consistent with the policy guidance set forth in the State's long-range plans.  Local service implementation plans shall be subject to the approval of the Secretary.
(e)	The Secretary shall ensure that the Department's requests for expansion funds for area authorities are consistent with the State's long-range plans and include consideration  of needs identified by the area authorities and their local plans.
"§ 122C-143.2.  Annual Memorandum of Agreement.
(a)	In accordance with procedures specified by the Secretary, the area authority shall complete cost finding, rate setting, and annual age/disability service planning as preparation for a Memorandum of Agreement between the area authority and the Department.
(b)	In a format established by the Secretary, the Memorandum of Agreement shall include age/disability service plans that delineate the services that are to be purchased by the State.  Payment for services purchased shall be made at reimbursement rates established in G.S. 122C-147.2.
(c)	The Memorandum of Agreement shall include the area authority activities that will be supported by grants allocated in accordance with G.S. 147.1(c)(2).
(d)	The Memorandum of Agreement shall provide flexibility for the area authority to earn State resources within the payment policy for each age/disability fund established by G.S. 122C-143.1(b).
(e)	The Memorandum of Agreement may delineate other special conditions or expectations."
Sec. 4.  G.S. 122C-144 is repealed.
Sec. 5.  Chapter 122C of the General Statutes is amended by inserting a new section to read:
"§ 122C-144.1.  Budget format and reports.
(a)	The area authority shall maintain its budget in accordance with the requirements of Article 3 of Subchapter III of Chapter 159 of the General Statutes, the Local Government Budget and Fiscal Control Act.
(b)	The Secretary may require periodic reports of receipts and expenditures for all area authority services provided directly or under contract according to a format prescribed by the Secretary.
(c)	In accordance with G.S. 159-34, the area authority shall have an audit completed and submit it to the Local Government Commission.
(d)	The Secretary may require reports of client characteristics, staffing patterns, agency policies or activities, services, or specific financial data of the area authority, but the reports shall not identify individual clients of the area authority unless specifically required by State statute or federal statute or regulation, or unless valid consent for the release has been given by the client or legally responsible person."
Sec. 6.  (a) The catch line of G.S. 122C-147 reads as rewritten:
"§ 122C-147.  Financing and title of area authority property."
(b) G.S. 122C-147(a) is repealed.
Sec. 7.  Part 4 of Article 4 of Chapter 122C of the General Statutes is amended by inserting the following new sections to read:
"§ 122C-147.1.  Appropriations and allocations.
(a)	Except as provided in subsection (b) of this section, funds shall be appropriated by the General Assembly in broad age/disability categories.  The Secretary shall allocate and account for funds in broad age/disability categories so that the area authority may, with flexibility, earn funds in response to local needs that are identified within the payment policy developed in accordance with G.S. 122C-143.1(b).
(b)	When the General Assembly determines that it is necessary to appropriate funds for a more specific purpose than the broad age/disability category, the Secretary shall determine whether expenditure accounting, special reporting within earning from a broad fund, the Memorandum of Agreement, or some other mechanism allows the best accounting for the funds.
(c)	Funds that have been appropriated by the General Assembly for a more specific purpose than specified in subsection (a) of this section shall be converted to a broad age/disability category at the beginning of the second biennium following the appropriation, unless otherwise acted upon by the General Assembly.
(d)	The Secretary shall allocate funds to area programs:
(1)	To be earned in a purchase of service basis, at negotiated reimbursement rates, for services that are included in the payment policy and delivered to mentally ill, developmentally disabled, and substance abuse clients and for services that are included in the payment policy to other recipients; or
(2)	To be paid under a grant on the basis of agreed-upon expenditures, when the Secretary determines that it would be impractical to pay on a purchase of service basis.
(e)	After the close of a fiscal year, final payments of funds shall be made:
(1)	Under the purchase of service basis, on the earnings of the area authority for the delivery to individuals within each age/disability group, of any services that are consistent with the payment policy established in G.S. 122C-143.1(b), up to the final allocation amount; or
(2)	When awarded on an expenditure basis, on allowable actual expenditures, up to the final allocation amount.
Under rules adopted by the Secretary, final payments shall be adjusted on the basis of the audit required in G.S. 122C-144.1(d).
"§ 122C-147.2.  Purchase of services and reimbursement rates.
When funds are used to purchase services, the following provisions apply:
(1)	Reimbursement rates for specific types of service shall be negotiated between the Secretary and the area authority.  The negotiation shall begin with the rate determined by the standardized cost-finding and rate-setting procedure that is required by G.S. 122C-143.2(a) or by another method approved by the Secretary.
(2)	The reimbursement rate used for the payment of services shall incorporate operating and administrative costs, including costs for property in accordance with G.S. 122C-147."
Sec. 8.  G.S. 122C-148, 122C-149, and 122C-150 are repealed.
Sec. 9.  G.S. 122C-151 reads as rewritten:
"§ 122C-151.  Responsibilities of those receiving appropriations.
(a)	All resources allocated to and received by any area authority and used for programs of mental health, developmental disabilities, substance abuse or other related services are subject to the conditions specified in this Article and to the rules of the Commission and the Secretary and to the conditions of the Memorandum of Agreement specified in G.S. 122C-143.2.
(b)	If an area authority fails to complete actions necessary for the development of a Memorandum of Agreement, fails to file required reports within the time limit set by the Secretary, or fails to comply with any other requirements specified in this Article, the Secretary may:
(1)	Delay payments; and
(2)	With written notification of cause and subject to an appeal as provided by G.S. 122C-151.2, reduce or deny payment of funds.  Restoration of funds upon compliance is within the discretion of the Secretary."
Sec. 10. G.S. 122C-145 is renumbered as G.S. 122C-151.2.
Sec. 11. Effective July 1, 1994, G.S. 122C-151.1 is repealed.
Sec. 12. Effective January 1, 1994, Part 4 of Article 4 of Chapter 122C of the General Statutes is amended by adding the following new sections to read:
"§ 122C-151.3.  Dispute with area authorities.
An area authority shall establish written procedures for resolving disputes over decisions of an area authority that may be appealed to the Area Authority Appeals Panel under G.S. 122C-151.4.  The procedures shall be informal and shall provide an opportunity for those who dispute the decision to present their position.
"§ 122C-151.4.  Appeal to Area Authority Appeals Panel.
(a)	Definitions. – The following definitions apply in this section:
(1)	'Contract' means a contract with an area authority to provide services, other than personal services, to clients and other recipients of services.
(2)	'Contractor' means a person who has a contract or who had a contract during the current fiscal year.
(3)	'Former contractor' means a person who had a contract during the previous fiscal year.
(b)	Appeals Panel. – The Area Authority Appeals Panel is established.  The Panel shall consist of three members appointed by the Secretary.  The Secretary shall determine the qualifications of the Panel members.  Panel members serve at the pleasure of the Secretary.
(c)	Who Can Appeal. – The following persons may appeal to the Area Authority Appeals Panel after having exhausted the appeals process at the appropriate area authority:
(1)	A contractor or a former contractor who claims that an area authority is not acting or has not acted within applicable State law or rules in imposing a particular requirement on the contractor on fulfillment of the contract;
(2)	A contractor or a former contractor who claims that a requirement of the contract substantially compromises the ability of the contractor to fulfill the contract;
(3)	A contractor or former contractor who claims that an area authority has acted arbitrarily and capriciously in reducing funding for the type of services provided or formerly provided by the contractor or former contractor;
(4)	A client or a person who was a client in the previous fiscal year, who claims that an area authority has acted arbitrarily and capriciously in reducing funding for the type of services provided or formerly provided to the client directly by the area authority; and
(5)	A person who claims that an area authority did not comply with a State law or a rule adopted by the Secretary or the Commission in developing the plans and budgets of the area authority and that the area authority's failure to comply has adversely affected the ability of the person to participate in the development of the plans and budgets.
(d)	Hearing. – All members of the Area Authority Appeals Panel shall hear an appeal to the Panel.  An appeal shall be filed with the Panel within the time required by the Secretary and shall be heard by the Panel within the time required by the Secretary.  A hearing shall be conducted at the place determined in accordance with the rules adopted by the Secretary.  A hearing before the Panel shall be informal; no sworn testimony shall be taken and the rules of evidence do not apply.  The person who appeals to the Panel has the burden of proof.  The Panel shall not stay a decision of an area authority during an appeal to the Panel.
(e)	Decision. - The Area Authority Appeals Panel shall make a written decision on each appeal to the Panel within the time set by the Secretary.  A decision may direct a contractor or an area authority to take an action or to refrain from taking an action, but it shall not require a party to appeal to pay any amount except payment due under the contract.  In making a decision, the Panel shall determine the course of action that best protects or benefits the clients of the area authority.  If a party to an appeal fails to comply with a decision of the Panel and the Secretary determines that the failure deprives clients of the area authority of a type of needed service, the Secretary may use funds previously allocated to the area authority to provide the service.
(f)	150B Appeal. - A person who is dissatisfied with a decision of the Panel may commence a contested case under Article 3 of Chapter 150B of the General Statutes.  Notwithstanding G.S. 150B-2(1), an area authority is considered an agency for purposes of the limited appeal authorized by this section.  The Secretary shall make a final decision in the contested case."
Sec. 13.  G.S. 122C-112(a) reads as rewritten:
"(a)	The Secretary shall:
(1)	Enforce the provisions of this Chapter and the rules of the Commission and the Secretary;
(2)	Assist counties and area authorities in the establishment and operation of community-based programs within catchment areas specified in rules adopted by the Commission;
(3)	Operate State facilities and adopt rules pertaining to their operation;
(4)	Promote a unified system of services for the citizens of this State by coordinating services provided in State facilities and area facilities;
(5)	Approve the plans and budgets of an area authority and adopt rules pertaining to the content and format of these plans and budgets;
(6)	Adopt rules governing the expenditure of all area authority funds;
(6a)	Adopt rules to implement the appeal procedure authorized by G.S. 122C-151.2;
(7)	Adopt rules for the establishment of single portal designation and approve an area as a single portal area;
(8)	Except as provided in G.S. 122C-26(4), adopt rules establishing procedures for waiver of rules adopted by the Secretary under this Chapter;
(9)	Notify the clerks of superior court of changes in the designation of State facility regions and of facilities designated under G.S. 122C-252;
(10)	Promote public awareness and understanding of mental health, mental illness, developmental disabilities, and substance abuse;
(11)	Administer and enforce rules that are conditions of participation in federal or State financial aid;
(12)	Carry out G.S. 122C-361; and
(13)	Coordinate and facilitate the development and administration of the early intervention system for eligible infants and toddlers and shall assign among the cooperating agencies the responsibility, including financial responsibility, for services.  The Secretary shall be advised by the Interagency Coordinating Council for Handicapped Children from Birth to Five Years of Age, established by G.S. 143B-179.5, and may enter into formal interagency agreements to establish the collaborative relationships with the Department of Environment, Health, and Natural Resources, the Department of Public Instruction, other appropriate agencies, and other public and private service providers necessary to administer the system and deliver the services.
		The Secretary shall adopt rules to implement the early intervention system, in cooperation with all other appropriate agencies."
Sec. 14.  Section 11 of this act becomes effective July 1, 1994.  Section 12 of this act becomes effective January 1, 1994.  All other sections of this act become effective July 1, 1993.