AUBURN — St. Francis Recovery Center, a rehab and halfway house for men recovering from addiction, will cut its number of beds in half — from 32 to 16 — by the end of the month in an effort to keep its funding. 

Other mental health facilities may quickly have to do the same.

And soon, hundreds of agencies serving thousands of residential MaineCare patients may find themselves facing an altogether new system of state funding.

St. Francis, which is run by Catholic Charities, is one of three organizations recently told they have too many beds for federal Medicaid guidelines. If they want to keep serving patients with MaineCare — which is largely funded through federal Medicaid dollars —  they must cut their inpatient operation.

The other two organizations are the Milestone Foundation, which runs a 41-bed emergency shelter and an 18-bed detox facility in Portland, and Serenity House, which runs a 33-bed residential treatment program in Portland for men dealing with addiction. To keep getting MaineCare funding, all must cut their programs to 16 beds or fewer.

St. Francis will make that cut. Beginning Nov. 1, it will provide 16 beds, some in the short-stay rehab house and some in the longer-stay halfway house, and focus more on outpatient services. It is working with the 32 men living there to figure out who will stay, who will go, and what will happen to them. For those who leave the center at 24 Dunn St., some will go home or to temporary, subsidized housing. Others might get one of the few beds available at another substance-abuse facility. But some, especially those living at St. Francis as part of court-ordered rehab, could have trouble finding a place.

"There may be some that end up going back to jail," said Carolee Lindsey, director of services for St. Francis. "Anybody who's come along and they've been mandated here and they're doing a good job, we're going to try to avoid that."

Even before the cuts, St. Francis had a waiting list. Lindsey worries it won't be able to provide the help its men need, even with additional outpatient services. 

"These folks are not going away," she said. "They'll end up in the criminal justice system, many of them. And that costs more. If we don't have viable treatment options for folks and they're falling through the cracks, their brains will still be screaming for the drugs."

Although St. Francis and the two Portland organizations are the only ones struggling to cut beds now, other mental-health facilities soon may follow. That's because the federal government recently told Maine it had incorrectly interpreted the definition of an "institution for mental disease," or IMD. Such IMDs are not allowed to get Medicaid — or, in Maine's case, MaineCare.

St. Francis and the two Portland organizations are considered IMDs because they each had more than 16 beds under one roof. Other mental-health facilities might also be considered IMDs if they have more than 16 beds among different buildings. The state is still talking with the federal Centers for Medicare and Medicaid about that.

If the decision isn't in Maine's favor, other residential mental-health facilities might have to make the same cuts as St. Francis if they want to keep their MaineCare funding. Maine gets $2 from the federal government for every $1 it puts in, and the state couldn't afford to make up that federal money. 

Maine has been paying for those mental-health facilities on behalf of MaineCare patients for years, since its overall plan for funding private, non-medical institutions — such as detox facilities, halfway houses, crisis intervention and children's residential treatment facilities — had been approved by the federal government in 2004.

But now that specific payments to IMDs are being questioned, Maine's $260 million plan for funding all private, nonmedical institutions is being questioned, too. That means the way Maine pays for and provides residential care, including care for the elderly, children, recovering addicts and the disabled, could change.

The change could affect 400 agencies serving 6,000 people.

Maine is one of only two states that bundle costs together, paying one agency to provide multiple services to a MaineCare patient in a residential setting. The 1999 federal Olmstead Act requires states to place people with mental disabilities in community settings and in the least restrictive environments possible. Institutions are out. Outpatient care is in.

So Maine's way — paying an agency to provide multiple services in a residential setting — is a problem.

The Maine Department of Health and Human Services met with providers this week in Augusta to outline the situation. It will hold six regional meetings in November to discuss options and possible new funding models. One meeting will be held Thursday, Nov. 17, in Lewiston. The time and specific location had not been announced.

But no matter what, DHHS officials say, the way Maine pays for residential services — and which residential services are available — will soon look different.

"It's changing; it's changing as we speak," said Guy Cousins, director of the Office of Substance Abuse and acting director of the Office of Adult Mental Health Services. "It's how much further do we need to change in order to comply with a service that meets the needs of clients and is reimbursable?"

ltice@sunjournal.com