A BILL TO BE ENTITLED
AN ACT to clarify and strengthen the role of local management entities as recommended by the joint legislative oversight committee on mental health, developmental disabilities, and substance abuse services.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 122C‑3 is amended by adding a new subdivision to read:
"§ 122C‑3.  Definitions.
The following definitions apply in this Chapter:…
(20b)	"Local management entity" or "LME" means an area authority, county program, or consolidated human services agency. An LME is not a unit of local government, and the term refers to functional responsibilities rather than governance structure."
SECTION 2.  G.S. 122C‑111 reads as rewritten:
"§ 122C‑111.  Administration.
The Secretary shall administer and enforce the provisions of this Chapter and the rules of the Commission and shall operate State facilities. An area director or program director shall (i) manage the public mental health, developmental disabilities, and substance abuse system for the area authority or county program according to the local business plan, and (ii) enforce applicable State laws, rules of the Commission, and rules of the Secretary. The Secretary in cooperation with area and county program directors and State facility directors shall provide for the coordination of public services between area authorities, county programs, and State facilities. The area authority or county program shall monitor the provision of mental health, developmental disability, and substance abuse services for compliance with the law, which monitoring shall not supersede or duplicate the regulatory authority or functions of agencies of the Department."
SECTION 3.  G.S. 122C‑115.2(a) reads as rewritten:
"§ 122C‑115.2.   LME business plan required; content, process, certification.
(a)	Every county, through an area authority or county program, shall provide for the development, review, and approval of an LME business plan for the management and delivery of mental health, developmental disabilities, and substance abuse services. An LME business plan shall provide detailed information on how the area authority or county program will meet State standards, laws, and rules for ensuring quality mental health, developmental disabilities, and substance abuse services, including outcome measures for evaluating program effectiveness. The business plan shall be in effect for at least three State fiscal years."
SECTION 4.  Article 4 of Chapter 122C is amended by adding a new section to read:
"§ 122C‑115.4.  Responsibilities of local management entities.
(a)	Local management entities are responsible for the administration and management of the public system of mental health, developmental disabilities, and substance abuse services at the community level. An LME plans, develops, implements, and monitors services within a specified geographic area for both insured and uninsured individuals. 
(b)	The core functions of an LME include all of the following:
(1)	Access for all citizens to core services through the implementation of a 24‑hour a day, seven‑day a week screening, triage, and referral process and a uniform portal of entry into care.
(2)	Provider endorsement, monitoring, technical assistance, and capacity development. An LME may remove as a choice a provider who fails to meet defined quality criteria or fails to provide data required for monitoring client outcomes.
(3)	Utilization review and determination of the appropriate level and intensity of services for all State‑funded services, authorization of recipients of services under a Medicaid waiver, review and approval of all person‑centered plans, utilization management for all services, care coordination, quality management, and authorization of State psychiatric hospital and other State facility bed days.
(4)	Community collaboration and consumer affairs including assurance of rights, appeals, establishment of, and support for an effective consumer and family advisory committee.
(5)	Financial management and accountability including information management for the delivery of publicly funded services for mental illness, developmental disabilities, and substance abuse.
(c)	An area authority or county program may contract with any public or private entity for the implementation of some or all of the LME responsibilities articulated under this section. A consolidated human services agency may contract with any public or private entity for the implementation of some or all of the LME responsibilities subject to the requirements of G.S. 122C‑127. The Secretary may not remove any responsibility enumerated under subsection (b) of this section absent an individualized finding that a particular area authority or county program is not providing minimally adequate services under G.S. 122C‑124.1 or is in imminent danger of failing financially under G.S. 122C‑125. The notice and procedural requirements of G.S. 122C‑124.1 and G.S. 122C‑125 shall apply to the findings."
SECTION 5.  Effective July 1, 2009, G.S. 122C‑115.4(b) as enacted in Section 4 of this act reads as rewritten:
"(b)	The core functions of an LME include all of the following:
(1)	Access for all citizens to core services through the implementation of a 24‑hour a day, seven‑days a week screening, triage, and referral process and a uniform portal of entry into care.
(2)	Provider endorsement, monitoring, technical assistance, and capacity development. An LME may remove as a choice a provider who fails to meet defined quality criteria or fails to provide data required for monitoring client outcomes.
(3)	Utilization review and determination of the appropriate level and intensity of services for all services, authorization of recipients of services under a Medicaid waiver, review and approval of all person‑centered plans, utilization management for all services, care coordination, quality management, and authorization of State psychiatric hospital and other State facility bed days.
(4)	Community collaboration and consumer affairs including assurance of rights, appeals, establishment and support for an effective consumer and family advisory committee.
(5)	Financial management and accountability including information management for the delivery of publicly funded services for mental illness, developmental disabilities, and substance abuse."
SECTION 6.  G.S. 122C‑118.1 reads as rewritten:
"§ 122C‑118.1.  Structure of area board.
(a)	An area board shall have no fewer than 11 and no more than 25 members. In a single‑county area authority, the members shall be appointed by the board of county commissioners. Except as otherwise provided, in areas consisting of more than one county, each board of county commissioners within the area shall appoint one commissioner as a member of the area board. These members shall appoint the other members. The boards of county commissioners within the multicounty area shall have the option to appoint the members of the area board in a manner other than as required under this section by adopting a resolution to that effect. The boards of county commissioners in a multicounty area authority shall indicate in the business plan each board's method of appointment of the area board members in accordance with G.S. 122C‑115.2(b). These appointments shall take into account sufficient citizen participation, representation of the disability groups, and equitable representation of participating counties. Individuals appointed to the board shall include an individual with financial expertise, a county finance officer, an individual with expertise in management or business, and an individual representing the interests of children. A member of the board may be removed with or without cause by the initial appointing authority. Vacancies on the board shall be filled by the initial appointing authority before the end of the term of the vacated seat or within 90 days of the vacancy, whichever occurs first, and the appointments shall be for the remainder of the unexpired term.
(b)	Not more than fifty percent (50%) of the members of the area board shall represent the following:
(1)	A physician licensed under Chapter 90 of the General Statutes to practice medicine in North Carolina who, when possible, is certified as having completed a residency in psychiatry.
(2)	A clinical professional from the fields of mental health, developmental disabilities, or substance abuse.
(3)	At least one family member or individual from a citizens' organization composed primarily of consumers or their family members, representing the interests of individuals:
a.	With mental illness; b.	In recovery from addiction;  orc.	With developmental disabilities.
(4)	At least one openly declared consumer:
a.	With mental illness; 
b.	With developmental  disabilities; or
c.	In recovery from addiction.
(c)	The board of county commissioners may elect to appoint a member of the area authority board to fill concurrently more than one category of membership if the member has the qualifications or attributes of more than one category of membership.
(d)	Any member of an area board who is a county commissioner serves on the board in an ex officio capacity. The terms of county commissioners on an area board are concurrent with their terms as county commissioners. The terms of the other members on the area board shall be for three years, except that upon the initial formation of an area board one‑third shall be appointed for one year, one‑third for two years, and all remaining members for three years. Members shall not be appointed for more than two consecutive terms. Board members serving as of July 1, 2006, may remain on the board for one additional term.
(e)	Upon request, the board shall provide information pertaining to the membership of the board that is a public record under Chapter 132 of the General Statutes."
SECTION 7.  G.S. 122C‑115.1(g) reads as rewritten:
"(g)	In a single‑county program, an advisory committee shall be appointed by the board of county commissioners and shall report to the county manager. The appointments shall take into account sufficient citizen participation, equitable representation of the disability groups, and equitable representation of participating counties. The membership shall conform to the requirements in G.S. 122C‑118.1. In a multicounty program, the advisory committee shall be appointed in accordance with the terms of the interlocal agreement."
SECTION 8.  G.S. 122C‑115.1(a) reads as rewritten:
"§ 122C‑115.1.  County governance and operation of mental health, developmental disabilities, and substance abuse services program.
(a)	A county may operate a county program for mental health, developmental disabilities, and substance abuse services as a single county or, pursuant to Article 20 of Chapter 160A of the General Statutes, may enter into an interlocal agreement with one or more other counties for the operation of a multicounty program. An interlocal agreement shall provide for the following:
(1)	Adoption and administration of the program budget in accordance with Chapter 159 of the General Statutes.
(2)	Appointment of a program director to carry out the provisions of G.S. 122C‑111 and duties and responsibilities delegated by the county. Except when specifically waived by the Secretary, the program director shall meet the following minimum qualifications:
a.	Masters degree,
b.	Related experience, and
c.	Management experience.
(3)	A targeted minimum population of 200,000 or a targeted minimum number of five counties served by the program.
(4)	Compliance with the provisions of this Chapter and the rules of the Commission and the Secretary.
(5)	Written notification to the Secretary prior to the termination of the interlocal agreement.
(6)	Appointment of an advisory committee. The interlocal agreement shall designate a county manager to whom the advisory committee shall report. The interlocal agreement shall also designate the appointing authorities. The appointing authorities shall make appointments that take into account sufficient citizen participation, equitable representation of the disability groups, and equitable representation of participating counties. At least fifty percent (50%) of the membership shall conform to the requirements provided in G.S. 122C‑188.1."
SECTION 9.  Effective January 1, 2007, G.S. 122C‑115.1(a), as amended by Section 8 of this act reads as rewritten:
"§ 122C‑115.1.  County governance and operation of mental health, developmental disabilities, and substance abuse services program.
(a)	A county may operate a county program for mental health, developmental disabilities, and substance abuse services as a single county or, pursuant to Article 20 of Chapter 160A of the General Statutes, may enter into an interlocal agreement with one or more other counties for the operation of a multicounty program. An interlocal agreement shall provide for the following:
(1)	Adoption and administration of the program budget in accordance with Chapter 159 of the General Statutes.
(2)	Appointment of a program director to carry out the provisions of G.S. 122C‑111 and duties and responsibilities delegated by the county. Except when specifically waived by the Secretary, the program director shall meet all the following minimum qualifications:
a.	Masters degree.
b.	Related experience.
c.	Management experience.
d.	Any other qualifications required under the job classification adopted by the State Personnel Commission.
(3)	A targeted minimum population of 200,000 or a targeted minimum number of five counties served by the program.
(4)	Compliance with the provisions of this Chapter and the rules of the Commission and the Secretary.
(5)	Written notification to the Secretary prior to the termination of the interlocal agreement.
(6)	Appointment of an advisory committee. The interlocal agreement shall designate a county manager to whom the advisory committee shall report. The interlocal agreement shall also designate the appointing authorities. The appointing authorities shall make appointments that take into account sufficient citizen participation, equitable representation of the disability groups, and equitable representation of participating counties. The membership shall conform to the requirements provided in G.S. 122C‑118.1."
SECTION  10.  Effective January 1, 2007, G.S. 122C‑115.1(f) reads as rewritten:
"(f)	In a single‑county program, the program director shall be appointed by the county manager. In a multicounty program, the program director shall be appointed in accordance with the terms of the interlocal agreement.
Except when specifically waived by the Secretary, the program director in a single county program shall meet all the following minimum qualifications:
(1)	Masters degree.
(2)	Related experience.
(3)	Management experience.
(4)	Any other qualifications required under the job classification adopted by the State Personnel Commission."
SECTION 11.  Effective January 1, 2007, G.S. 122C‑121(d) reads as rewritten:
"(d)	Except when specifically waived by the Secretary, the area director shall meet all the following minimum qualifications:
(1)	Masters degree.(2)	Related  experience.
(3)	Management experience.
(4)	Any other qualifications required under the job classification adopted by the State Personnel Commission."SECTION 12.  Effective July 1, 2007, G.S. 122C‑115(a) reads as rewritten:
"§ 122C‑115.  Duties of counties; appropriation and allocation of funds by counties and cities.
(a)	A county shall provide mental health, developmental disabilities, and substance abuse services through an area authority or through a county program established pursuant to G.S. 122C‑115.1. The catchment area of an area authority or a county program shall contain either a minimum population of at least 200,000 or a minimum of six counties. To the extent this section conflicts with G.S. 153A‑77(a), the provisions of G.S. 153A‑77(a) control."
SECTION 13.  Effective July 1, 2007, G.S. 122C‑115.1(a), as amended by Sections 8 and 9 of this act, reads as rewritten:
"§ 122C‑115.1.  County governance and operation of mental health, developmental disabilities, and substance abuse services program.
(a)	A county may operate a county program for mental health, developmental disabilities, and substance abuse services as a single county or, pursuant to Article 20 of Chapter 160A of the General Statutes, may enter into an interlocal agreement with one or more other counties for the operation of a multicounty program. An interlocal agreement shall provide for the following:
(1)	Adoption and administration of the program budget in accordance with Chapter 159 of the General Statutes.
(2)	Appointment of a program director to carry out the provisions of G.S. 122C‑111 and duties and responsibilities delegated by the county. Except when specifically waived by the Secretary, the program director shall meet all the following minimum qualifications:
a.	Masters degree.
b.	Related experience.
c.	Management experience.
d.	Any other qualifications required under the job classification adopted by the State Personnel Commission.
	(4)	Compliance with the provisions of this Chapter and the rules of the Commission and the Secretary.
(5)	Written notification to the Secretary prior to the termination of the interlocal agreement.
(6)	Appointment of an advisory committee. The interlocal agreement shall designate a county manager to whom the advisory committee shall report. The interlocal agreement shall also designate the appointing authorities. The appointing authorities shall make appointments that take into account sufficient citizen participation, equitable representation of the disability groups, and equitable representation of participating counties. The membership shall conform to the requirements provided in G.S. 122C‑118.1."
SECTION 14.  G.S. 122C‑117(c) reads as rewritten:
"(c)	Within 30 days of the end of each quarter of the fiscal year, the area director and finance officer of the area authority shall provide to the finance officer of the county, or in the case of a multicounty area authority, the finance officers of each county, the quarterly report of the area authority, The report shall include a budgetary statement and balance sheet that details the assets, liabilities, and fund balance of the area authority. The county finance officer shall review the report and may make comments regarding the finances of the area authority before the report is provided to each member of the board of county commissioners of the area authority. This information shall be presented in a format prescribed by the county. At least twice a year, this information shall be presented in person and shall be read into the minutes of the meeting at which it is presented. In addition, the area director or finance officer of the area authority shall provide to the board of county commissioners ad hoc reports as requested by the board of county commissioners."
SECTION 15.  G.S. 122C‑115.1(e) reads as rewritten:
"(e)	Within 30 days of the end of each quarter of the fiscal year, the program director and finance officer of the county program shall present to the finance officer of the county, or in the case of a multicounty program, the finance officers of each county, the quarterly report of the county program. The report shall include a budgetary statement and balance sheet that details the assets, liabilities, and fund balance of the county program. The county finance officer shall review the report and may make comments regarding the finances of the program before the report is provided to each member of the board of county commissioners. This information shall be read into the minutes of the meeting at which it is presented. The program director or finance officer of the county program shall provide to the board of county commissioners ad hoc reports as requested by the board of county commissioners."
SECTION 16.  G.S. 153A‑149(c)(22) reads as rewritten:
"(c)	Each county may levy property taxes for one or more of the purposes listed in this subsection up to a combined rate of one dollar and fifty cents ($1.50) on the one hundred dollars ($100.00) appraised value of property subject to taxation. Authorized purposes subject to the rate limitation are:
…
(22)	Mental Health. – To provide for the county's share of the cost of maintaining and administering services offered by, to, or through the area mental health, developmental disabilities, and substance abuse authority or the county program for mental health, developmental disabilities, and substance abuse services."
SECTION 17.  G.S. 153A‑247 reads as rewritten:
"§ 153A‑247. Provision for public health and mental health.
A county may provide for and regulate the public health under Chapter 130A of the General Statutes and any other law authorizing local public health activities and may provide mental health, developmental disabilities, and substance abuse programs."
SECTION 18.  G.S. 122C‑115.2(b)(1) reads as rewritten:
"(b)	Business plans shall include the following:
(1)	Description of how the following core administrative functions will be carried out:
a.	Planning. – Local services plans that identify service gaps and methods for filling the gaps, ensure the availability of an array of services based on consumer needs, provision of core services, equitable service delivery among member counties, and prescribing the efficient and effective use of all funds for targeted services. Local planning shall be an open process involving key stakeholders.
b.	Provider network development. – Ensuring available, qualified providers to deliver services based on the business plan. Development of new providers and monitoring provider performance and service outcomes. Provider network development shall address consumer choice and fair competition. For the purposes of this section, a "qualified provider" means a public or private provider who meets the provider qualifications as defined by rules adopted by the Secretary.
c.	Service management. – Implementation of uniform portal process. Service management shall include appropriate level and intensity of services, management of State hospitals/facilities bed days, utilization management, case management, and quality management. If services are provided directly by the area authority or county program, then the plan shall indicate how consumer choice and fair competition in the marketplace is ensured.
d.	Financial management and accountability. – Carrying out business functions in an efficient and effective manner, cost‑sharing, and managing resources dedicated to the public system.
e.	Service monitoring and oversight. – Ensuring that services provided to consumers and families meet State outcome standards and ensure quality performance by providers in the network.
f.	Evaluation. – Self‑evaluation based on statewide outcome standards and participation in independent evaluation studies.
g.	Collaboration. – Collaborating with other local service systems in ensuring access and coordination of services at the local level. Collaborating with other area authorities and county programs and the State in planning and ensuring the delivery of services.
h.	Access. – Ensuring access to core and targeted services."
SECTION 19.  G.S. 122C‑141 is amended by adding a new subsection to read:
"(d)	A county may be a qualified public provider and may, under Article 20 of Chapter 160A of the General Statutes, enter into an interlocal agreement with one or more other counties to operate as a qualified public provider."
SECTION 20.  G.S. 122C‑112.1(a) reads as rewritten:
"§ 122C‑112.1.  Powers and duties of the Secretary.
(a)	The Secretary shall do all of the following:
(1)	Oversee development of the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services.
(2)	Enforce the provisions of this Chapter and the rules of the Commission and the Secretary.
(3)	Establish a process and criteria for the submission, review, and approval or disapproval of LME business plans submitted by area authorities and counties for the management and provision of mental health, developmental disabilities, and substance abuse services.
(4)	Adopt rules specifying the content and format of LME business plans.
(5)	Review business plans and, upon approval of the LME business plan, certify the submitting area authority or county program to provide mental health, developmental disabilities, and substance abuse services in the applicable catchment area.
(6)	Establish comprehensive, cohesive oversight and monitoring procedures and processes to ensure continuous compliance by area authorities, county programs, and all providers of public services with State and federal policy, law, and standards. Procedures shall include performance measures and report cards for each area authority and county program.(7)	Conduct regularly scheduled monitoring and oversight of area authority, county programs, and all providers of public services. Monitoring and oversight shall include compliance with the program business plan, core administrative functions, and fiscal and administrative practices and shall also address outcome measures, consumer satisfaction, client rights complaints, and adherence to best practices.
(8)	Make findings and recommendations based on information and data collected pursuant to subdivision (7) of this subsection and submit these findings and recommendations to the applicable area authority board, county program director, board of county commissioners, providers of public services, and to the Local Consumer Advocacy Office.
(9)	Assist area authorities and county programs in the establishment and operation of community‑based programs.
(10)	Operate State facilities and adopt rules pertaining to their operation.
(11)	Develop a unified system of services provided at the community level, by State facilities, and by providers enrolled or under a contract with the State and an area authority or county program.(12)	Adopt rules governing the expenditure of all funds for mental health, developmental disabilities, and substance abuse programs and services.
(13)	Adopt rules to implement the appeal procedure authorized by G.S. 122C‑151.2.
(14)	Adopt rules for the implementation of the uniform portal process.
(15)	Except as provided in G.S. 122C‑26(4), adopt rules establishing procedures for waiver of rules adopted by the Secretary under this Chapter.
(16)	Notify the clerks of superior court of changes in the designation of State facility regions and of facilities designated under G.S. 122C‑252.
(17)	Promote public awareness and understanding of mental health, mental illness, developmental disabilities, and substance abuse.
(18)	Administer and enforce rules that are conditions of participation for federal or State financial aid.
(19)	Carry out G.S. 122C‑361.
(20)	Monitor the fiscal and administrative practices of area authorities and county programs to ensure that the programs are accountable to the State for the management and use of federal and State funds allocated for mental health, developmental disabilities, and substance abuse services. The Secretary shall ensure maximum accountability by areaauthorities and county programs for rate‑setting methodologies, reimbursement procedures, billing procedures, provider contracting procedures, record keeping, documentation, and other matters pertaining to financial management and fiscal accountability. The Secretary shall further ensure that the practices are consistent with professionally accepted accounting and management principles.
(21)	Provide technical assistance, including conflict resolution, to counties in the development and implementation of area authority and county program business plans and other matters, as requested by the county.
(22)	Develop a methodology to be used for calculating county resources to reflect cash and in‑kind contributions of the county.
(23)	Adopt rules establishing program evaluation and management of mental health, developmental disabilities, and substance abuse services.
(24)	Adopt rules regarding the requirements of the federal government for grants‑in‑aid for mental health, developmental disabilities, or substance abuse programs which may be made available to area authorities or county programs or the State. This section shall be liberally construed in order that the State and its citizens may benefit from the grants‑in‑aid.
(25)	Adopt rules for determining minimally adequate services for purposes of G.S. 122C‑124.1 and G.S. 122C‑125.
(26)	Establish a process for approving area authorities and county programs to provide services directly in accordance with G.S. 122C‑141.
(27)	Sponsor training opportunities in the fields of mental health, developmental disabilities, and substance abuse.
(28)	Enforce the protection of the rights of clients served by State facilities, area authorities, county programs, and providers of public services.
(29)	Adopt rules for the enforcement of the protection of the rights of clients being served by State facilities, area authorities, county programs, and providers of public services.
(30)	Prior to requesting approval to close a State facility under G.S. 122C‑181(b):
a.	Notify the Joint Legislative Commission on Governmental Operations, the Joint Legislative Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and members of the General Assembly who represent catchment areas affected by the closure; and
b.	Present a plan for the closure to the members of the Joint Legislative Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Senate Appropriations Committee on Health and Human Services for their review, advice, and recommendations. The plan shall address specifically how patients will be cared for after closure, how support services to community‑based agencies and outreach services will be continued, and the impact on remaining State facilities. In implementing the plan, the Secretary shall take into consideration the comments and recommendations of the committees to which the plan is presented under this subdivision.
(31)	Ensure that the State Plan for Mental Health, Developmental Disabilities, and Substance Abuse Services is coordinated with the Medicaid State Plan and NC Health Choice."
SECTION  21.  The Department of Health and Human Services shall reduce by ten percent (10%) annually the administrative funding for area authorities and county programs that do not comply with Sections 12 and 13 of this act.  The funds withdrawn for LME administrative functions shall be reallocated to the same area authority or county program to be used to provide mental health, developmental disabilities, and substance abuse services.
SECTION 22.  The Office of State Personnel shall develop a job classification for director of an area authority or county program that reflects the skills required of an individual operating a local management entity.  The Office of State Personnel shall also review the job classifications for area authority and county program finance officers to determine whether they reflect the skills necessary to manage the finances of a local management entity.  The Commission shall adopt a job classification for director and any new or revised job classifications for finance officers no later than December 31, 2006.  The requirements of the job classifications shall apply to persons hired by an area authority or county program on or after January 1, 2007.
SECTION 23.  The Department of Health and Human Services (Department) shall recalculate the LME systems management allocations for State fiscal year 2006‑2007 to include funds for each LME to implement 24‑hour, seven‑days a week screening, triage, and referral and the review and approval of all person-centered plans.  The funds shall be used by LMEs to implement those functions.
The Department shall also review the LME's responsibilities described in G.S. 122C‑115.4 in Section 4 of this act and recalculate the LME systems management allocations for State fiscal year 2006‑2007 to provide sufficient funds for LMEs to fully implement those functions. To the extent there remains any reduction in administrative funding between the 2005‑2006 and 2006‑2007 fiscal years LME systems management allocations, those funds shall be reallocated to those LMEs that will experience a reduction in their administrative budgets. The LMEs shall use the funds to provide mental health, developmental disabilities, and substance abuse services.
SECTION 24.  There is appropriated from the General Fund to the Department of Health and Human Services the sum of twenty thousand dollars ($20,000) for the 2006‑2007 fiscal year to provide training to area authority and county program board members under G.S 122C‑119.1.
SECTION 25.  Unless otherwise specified, this act becomes effective July 1, 2006.