A BILL TO BE ENTITLED
AN ACT TO ENACT VARIOUS LAWS TO IMPROVE THE Mental Health, Developmental Disabilities, and Substance Abuse Services SYSTEM, 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 1.1.  Expenditure of Service Dollars. – For the purpose of mitigating cash‑flow problems that many non‑single‑stream LMEs experience at the beginning of each fiscal year, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall adjust the timing and method by which allocations of service dollars are distributed to each non‑single‑stream LME.  To this end, the allocations shall be adjusted such that at the beginning of the fiscal year, the Department shall distribute not less than one‑twelfth of the LME's continuation allocation and subtract the amount of the adjusted distribution from the LME's total reimbursements for the fiscal year.
SECTION 1.2.  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of six million dollars ($6,000,000) for the 2008‑2009 fiscal year.  These funds shall be used to support LMEs in establishing additional regionally purchased and locally hosted substance abuse programs.  Funds appropriated shall be for the purpose of developing and enhancing the American Society of Addiction Medicine (ASAM) continuum of care at the community level. The Department of Health and Human Services shall work with LMEs in establishing these programs.
SECTION 1.3.(a)  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of six hundred seventy‑five thousand dollars ($675,000) for the 2008‑2009 fiscal year.  These funds shall be used to contract with an outside vendor for technical assistance to LMEs that are not meeting the standards necessary for single‑stream funding.
SECTION 1.3.(b)  The Department shall encourage the conversion of the remaining non‑single‑stream LMEs to single‑stream funding as soon as possible.  The Department shall also develop standards for the removal of single‑stream designation for those LMEs that do not continue to comply with the applicable requirements for single‑stream funding.
SECTION 1.4.  The Department of Health and Human Services shall simplify the current State Integrated Payment and Reporting System (IPRS) to encourage more providers to serve State‑paid clients.
SECTION 1.5.  The Department of Health and Human Services shall create a reporting system for both single‑stream funding and non‑unit‑cost reimbursement funding that is readily comprehensible and integrates with payment systems.
SECTION 1.6.  The Department of Health and Human Services shall determine why there have been under‑ and over‑expenditure of State service dollars by LMEs and shall take the action necessary to address the problem.  In making its determination, the Department shall consult with LMEs and providers. Not later than January 1, 2009, the Department shall report to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Fiscal Research Division, and the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services on actions taken to address the problem of LME under‑ and over‑expenditure of service dollars.
SECTION 2.1.(a)  State‑Operated Services. – In order to temporarily address high admissions to adult acute unit beds in the State psychiatric hospitals, the Secretary of the Department of Health and Human Services may open and operate on a temporary basis the Central Regional Hospital Wake Unit on the Dorothea Dix Campus and may maintain the Wake Unit on the Dix Campus until beds become available in the system.
SECTION 2.1.(b)  G.S. 122C‑181(a)(1) reads as rewritten:
"§ 122C‑181.  Secretary's jurisdiction over State facilities.
(a)	Except as provided in subsection (b) of this section, the Secretary shall operate the following facilities:
(1)	Psychiatric Hospitals:
a.	Cherry Hospital.
a1.	Central Regional Hospital.
b.	Dorothea Dix Hospital.
c.	John Umstead Hospital.
d.	Broughton Hospital.
e.	The Central Regional Hospital Wake Unit on the Dorothea Dix Campus."
This subsection expires upon the earlier of July 1, 2009, or the availability of beds at Central Regional Hospital.
SECTION 2.1.(c)  There is appropriated from the General Fund to the Department of Health and Human Services the sum of five million two hundred seventy‑four thousand dollars ($5,274,000) for the 2008‑2009 fiscal year.  These onetime funds shall be used to support the temporary opening and operation of the Central Regional Hospital Wake Unit on the Dorothea Dix Campus.
SECTION 2.2.(a)  G.S. 130A‑383(a) reads as rewritten:
"§ 130A‑383.  Medical examiner jurisdiction.
(a)	Upon the death of any person resulting from violence, poisoning, accident, suicide or homicide; occurring suddenly when the deceased had been in apparent good health or when unattended by a physician; occurring in a jail, prison, correctional institution, State facilities operated in accordance with Part 5 of Article 4 of Chapter 122C of the General Statutes; or in police custody; occurring pursuant to Article 19 of Chapter 15 of the General Statutes; or occurring under any suspicious, unusual or unnatural circumstance, the medical examiner of the county in which the body of the deceased is found shall be notified by a physician in attendance, hospital employee, law‑enforcement officer, funeral home employee, emergency medical technician, relative or by any other person having suspicion of such a death. No person shall disturb the body at the scene of such a death until authorized by the medical examiner unless in the unavailability of the medical examiner it is determined by the appropriate law enforcement agency that the presence of the body at the scene would risk the integrity of the body or provide a hazard to the safety of others. For the limited purposes of this Part, expression of opinion that death has occurred may be made by a nurse, an emergency medical technician or any other competent person in the absence of a physician."
SECTION 2.2.(b)  G.S. 122C‑31 is amended by adding the following new subsection to read:
"§ 122C‑31.  Report required upon death of client.
…
(g)	In addition to the reporting requirements specified in subsections (a) through (e) of this section, and pursuant to G.S. 130A‑383, every State facility shall report the death of any client of the facility, regardless of the manner of death, to the medical examiner of the county in which the body of the deceased is found."
SECTION 2.2.(c)  There is appropriated from the General Fund to the Department of Health and Human Services the sum of one hundred fifty‑five thousand two hundred twenty‑six dollars ($155,226) for the 2008‑2009 fiscal year.  These funds shall be used for one additional public health nurse consultant position and other costs associated with the increased investigatory requirements of this section.
SECTION 2.2.(d)  The Commission for Mental Health, Developmental Disabilities, and Substance Abuse Services shall study the current death reporting requirements under G.S. 122C‑26(5)(c) and assess the need for any additional reporting requirements or modifications to existing rules or procedures.  The Commission shall report its findings to the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services not later than November 1, 2008.
SECTION 2.3.  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of thirty million dollars ($30,000,000) for the 2008‑2009 fiscal year.  These funds shall be used to expand the Hospital Utilization Pilot Program statewide in a manner that maintains local control of funds and bed allocations, with a goal of reducing the use of State psychiatric hospital beds for those individuals staying two weeks or less.
SECTION 2.4.(a)  There is appropriated from the General Fund to the  Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of one million one hundred thirty‑four thousand one hundred sixty‑eight dollars ($1,134,168) for the 2008‑2009 fiscal year to implement three pilot programs of the Transitional Residential Treatment Program.  One pilot program shall be located in each of the State's three State psychiatric hospital catchment areas.
SECTION 2.4.(b)  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall develop and implement a plan for discharge planning at the local level for all disability groups.  The Department shall implement its plan as soon as possible.
SECTION 2.5.(a)  There is appropriated from the General Fund to the Housing Trust Fund the sum of ten million dollars ($10,000,000) for the 2008‑2009 fiscal year for the Housing 400 Initiative in order to reduce the need for State psychiatric hospitals in the long term.
SECTION 2.5.(b)  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, the sum of two million five hundred thousand dollars ($2,500,000) for the 2008‑2009 fiscal year to continue operating support for an estimated 500 units of the Housing 400 Initiative in order to reduce the need for State psychiatric hospitals in the long term.  It is the intent of the General Assembly that these funds shall be appropriated on a recurring basis.
SECTION 2.6.  Not later than October 1, 2008, the Department of Health and Human Services, Division of Medical Assistance, shall discontinue its policy of terminating Medicaid eligibility upon a recipient's admission to an Institution for Mental Disease (IMD) or upon a recipient's being placed in the custody of the judicial system. The Department shall substitute a policy of suspending eligibility for these individuals. The purpose of the new policy is to ensure that upon release from the hospital the eligible Medicaid recipient will have uninterrupted access to care and medications under the Medicaid program.
SECTION 2.7.  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall implement the tiered CAP‑MR/DD waiver program in accordance with Section 10.49(dd) of S.L. 2007‑323.  The Department shall implement the program with four tiers: (i) up to fifteen thousand dollars ($15,000); (ii) between fifteen thousand one dollars ($15,001) and forty‑five thousand dollars ($45,000); (iii) between forty‑five thousand one dollars ($45,001) and seventy‑five thousand dollars ($75,000); and (iv) between seventy‑five thousand one dollars ($75,001) and one hundred thousand dollars ($100,000). The Department shall review on a case‑by‑case basis tier funding in excess of one hundred thousand dollars ($100,000) and may authorize the excess amount based on standards adopted by the Department.
SECTION 2.8.  The North Carolina Institute of Medicine shall study and report on the transition for persons with developmental disabilities from one life setting to another, including barriers to transition and best practices in successful transitions.  The IOM should conduct this study using funds appropriated for IOM studies in the 2007 Session.  The study should encompass at least the following topics: (i) the transition for adolescents leaving high school, including adolescents in foster care and those in other settings; (ii) the transition for persons with developmental disabilities who live with aging parents; and (iii) the transition from the developmental centers to other settings.
SECTION 2.9.  The Department of Health and Human Services shall review State‑County Special Assistance rates to establish an appropriate rate for special care units for persons with a mental health disability, including individuals with Traumatic Brain Injury (TBI), and shall review current rules pertaining to special care units for persons with a mental health disability to determine if additional standards are necessary.  Effective July 1, 2008, care provided to individuals with Traumatic Brain Injury shall be paid at the special care unit rate paid for care of persons with a mental health disability. The Department shall report its findings and recommendations to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division not later than January 1, 2009.
SECTION 2.10.  The Department of Health and Human Services shall ensure that veterans and their families comprise one of the target populations for mental health, developmental disabilities, and substance abuse services in order that this population is eligible for existing funding.  
SECTION 3.1.  Community Services. – In order to ensure accountability for services provided and funds expended for community services, the Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall develop a tiered rate structure to replace the blended rate currently used for community support services.  Under the new tiered rate structure, services that are necessary but do not require the skill, education, or knowledge of a qualified professional should not be paid at the same rate as services provided by qualified skilled professionals.  The Department shall report on the development of the structure to the Joint Legislative Oversight Committee (LOC) on Mental Health, Developmental Disabilities, and Substance Abuse Services not later than October 1, 2008.  The Department shall not implement the tiered rate structure until after it has consulted with the LOC.
SECTION 3.2.  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall develop a service authorization process that separates the assessment function from the service delivery function at the LME level. In developing the process, the Department shall consider as an option separate LME assessment centers, the duties of which would include care coordination.  The Department shall report on the development of the service authorization process to the Joint Legislative Oversight Committee (LOC) on Mental Health, Developmental Disabilities, and Substance Abuse Services not later than October 1, 2008.  The Department shall not implement the service authorization process until after it has consulted with the LOC.
SECTION 3.3.(a)  The Department of Health and Human Services shall develop a plan to return the service authorization, utilization review, and utilization management functions to LMEs for all clients.  Not later than February 1, 2009, the Department shall report on the development of the plan to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division. Not later than July 1, 2009, utilization review, utilization management, and service authorization for publicly funded mental health, developmental disabilities, and substance abuse services should be returned to LMEs representing in total at least thirty percent (30%) of the State's population. The Department shall comply with the requirements of S.L. 2007‑323, Section 10.49(ee).  The Department shall not contract with an outside vendor for service authorization, utilization review, or utilization management functions, or otherwise obligate the State for these functions beyond September 30, 2009.  The Department shall require LMEs to include in their service authorization, utilization management, and utilization review a review of assessments, as well as person‑centered plans and random or triggered audits of services and assessments.
SECTION 3.3.(b)  The Department shall require that the licensed professional that signs a medical order for behavioral health services must indicate on the order whether the licensed professional (i) has had direct contact with the consumer, and (ii) has reviewed the consumer's assessment.  This requirement shall take effect no later than October 1, 2008.
SECTION 3.4.(a)  G.S. 122C‑151.4 reads as rewritten:
"§ 122C‑151.4.  Appeal to State MH/DD/SA Appeals Panel.
(a)	Definitions. – The following definitions apply in this section:
(1)	"Appeals Panel" means the State MH/DD/SA Appeals Panel established under this section.
(1a)	"Client" means an individual who is admitted to or receiving public services from an area facility. "Client" includes the client's personal representative or designee.
(1b)	"Contract" means a contract with an area authority or county program 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, or whose application for endorsement has been denied by an area authority or county program.
(3)	"Former contractor" means a person who had a contract during the previous fiscal year.
(b)	Appeals Panel. – The State MH/DD/SA 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 State MH/DD/SA Appeals Panel after having exhausted the appeals process at the appropriate area authority or county program:
(1)	A contractor or a former contractor who claims that an area authority or county program is not acting or has not acted within applicable State law or rules in denying the contractor's application for endorsement or 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 or county program 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 or county program 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 or county program; and
(5)	A person who claims that an area authority or county program 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 or county program and that the 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 State MH/DD/SA 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 State MH/DD/SA 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, an area authority, or a county program to take an action or to refrain from taking an action, but it shall not require a party to the 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 or county program. 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 or county program of a type of needed service, the Secretary may use funds previously allocated to the area authority or county program to provide the service.
(f)	Chapter 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(1a), an area authority or county program is considered an agency for purposes of the limited appeal authorized by this section. If the need to first appeal to the State MH/DD/SA Appeals Panel is waived by the Secretary, a contractor may appeal directly to the Office of Administrative Hearings after having exhausted the appeals process at the appropriate area authority or county program. The Secretary shall make a final decision in the contested case."
SECTION 3.4.(b)  The Department of Health and Human Services shall adopt guidelines for LME periodic review and reendorsement of providers to ensure that only qualified providers are endorsed and that LMEs hold those providers accountable for the Medicaid and State‑funded services they provide.
SECTION 3.5.(a)  Effective October 1, 2008, the catch line of G.S. 108A‑79 reads as rewritten:
"§ 108A‑79.  Appeals of county level decisions."
SECTION 3.5.(b)  Effective October 1, 2008, Article 4 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§ 108A‑79.1.  Appeals by Medicaid applicants and recipients.
(a)	An action by the Department to deny, terminate, suspend, or reduce Medicaid eligibility or to deny, terminate, suspend, or reduce Medicaid services is a "contested case" subject to the provisions of Chapter 150B of the General Statutes, except as provided by this section. At the time of providing the notice required under subsection (b) of this section, the Department shall file a petition with the Office of Administrative Hearings to determine the Medicaid applicant's or recipient's rights, duties, or privileges.(b)	In addition to the notice requirements of G.S. 150B‑23, the Department shall provide within 30 days of its decision written notice to the aggrieved applicant or recipient, or the applicant's or recipient's legal guardian, which notice shall include:
(1)	An explanation of the Department's decision.
(2)	A clear and concise statement of what service is being reduced, terminated, or denied and the basis upon which the decision was made.
(3)	A statement that the Department has filed a petition for administrative review of its decision in the Office of Administrative Hearings, and that the applicant or recipient has 30 days from the date of the Department's decision to decide whether or not to proceed with the hearing.
(4)	A clear explanation of how the hearing will proceed, what is required of the applicant in order to proceed or to decline to proceed, and that the applicant or recipient may be represented by an attorney or other person at the hearing. The notice shall further state that representation by an attorney may be available from Disability Rights of NC legal services and attorneys working with mediation centers throughout the State.
(5)	A statement that the recipient will continue to receive Medicaid services at the level provided on the day immediately preceding the Department's decision pending a final decision.
(6)	The telephone number of a contact person at the Department to respond in a timely fashion to applicant or recipient questions.
(7)	A brochure supplied by the North Carolina Protection and Advocacy System that explains the rights of applicants and recipients under the State Medical Assistance Program, including the rights to appeal decisions of the Department."
SECTION 3.6.  The Department of Health and Human Services, Division of Mental Health, Developmental Disabilities, and Substance Abuse Services, shall study Medicaid waivers, including 1915(b) and (c) waivers, for all LMEs.  In cases where Medicaid waivers are not appropriate for an LME, the Department shall identify and recommend strategies to increase LME flexibility to provide case management, assessment, limit provider networks, or other innovative approach for managing care.  Not later than March 1, 2009, the Department shall report its findings and recommendations to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division.
SECTION 3.7.(a)  The Secretary of the Department of Health and Human Services shall develop a detailed plan for General Assembly review on its recommendation to merge, consolidate, or establish regional arrangements or consortia of LMEs.  In developing the plan, the Secretary shall consult with LMEs to obtain input on the feasibility and effectiveness of potential mergers and the time frame needed to fully implement the mergers, regional arrangements, or consortia at the local level.  The Secretary shall provide the plan to the House of Representatives Appropriations Subcommittee on Health and Human Services, the Senate Appropriations Committee on Health and Human Services, the Joint Legislative Oversight Committee on Mental Health, Developmental Disabilities, and Substance Abuse Services, and the Fiscal Research Division not later than  March 1, 2009.
SECTION 3.7.(b)  The Secretary of the Department of Health and Human Services shall not take any action prior to January 1, 2010, that would result in the merger or consolidation of LMEs operating on January 1, 2008, or that would establish consortia or regional arrangements for the same purpose, except that LMEs that do not meet the catchment area requirements of G.S. 122C‑115 as of January 1, 2008, may initiate, continue, or implement the LMEs' merger or consolidation plans to overcome noncompliance with G.S. 122C‑115. 
SECTION 4.  Effective date. – This act becomes effective July 1, 2008.