AUGUSTA — Providers of mental health services are facing major changes in how much they are paid for services they offer to thousands of mentally ill Mainers who rely on publicly funded MaineCare health insurance.

Preliminary proposals by a consultant hired by the Department of Health and Human Services to examine its rate structure include both reductions and increases, depending on the service. But providers say the net financial effect would be negative.

“We are reeling from that proposal,” said Mary Lou Dyer, director of the Maine Association of Community Service Providers. “We are still going through the details.”

Health and Human Services Commissioner Mary Mayhew said the rate study is part of an effort to make sure taxpayer-funded services cost what they should.

“This isn’t a rate reduction tied to some budget cut that’s got to happen because some budget has been reduced,” said Mayhew in an interview with the Bangor Daily News. “This is about what are the wages you pay staff, what is the overhead you pay for rent or other overhead costs that support the operation of the agency and what, therefore, is an appropriate cost.”

The Legislature’s compromise budget bill, enacted in June 2015, called for examinations of certain parts of the MaineCare Benefits Manual, a lengthy and complicated document that lays out how Medicaid dollars should be spent for just about every aspect of health care. The study was inserted in the budget as a compromise after Republican Gov. Paul LePage’s administration proposed millions of dollars of rate cuts for child mental health service providers.

The budget bill called for studies in two areas: Section 28, which includes services for children with cognitive impairments, and Section 65, which includes behavioral health services.

DHHS opted to expand the study to include Section 13, which covers case managers who help clients with medical and social disorders, as well as Section 17, which covers a range of community support services for adults with severe mental illness.

The study, contracted to Arizona consulting firm Burns & Associates, resulted in a report that was presented to service providers last week. It includes proposed adjustments to dozens of services.

In Section 17, for example, the study proposes a 29 percent reduction in community integration services but a 58 percent increase in community rehabilitation services.

Providers have until early April to comment on the proposals, which will be followed by DHHS releasing a formal rule and implementing the new rates later this year.

The Section 17 rate proposals, which affect adults with severe mental illnesses, come on top of another DHHS review of who is receiving services under Section 17 with the intention of moving as many as 8,000 of those people to other Medicaid programs. Service providers have raised concerns about the other services not being comprehensive enough or simply not available near people who need them.

Mayhew said Section 17 should be reserved for the most severe mental illnesses — specifically schizophrenia and schizoaffective disorder — and that thousands of Mainers with less severe illnesses should be moved to other programs. Mayhew said too many people in Section 17 are causing delays in service for people who are too sick to wait.

A consent decree, which directs how mental health services should be provided in Maine, requires a face-to-face appointment within seven days for some with schizophrenia, according to Mayhew.

“The providers have not been coming anywhere near to meeting that expectation,” she said. “When I know we have people with schizophrenia waiting to get into services for days and weeks, that’s a problem.”

Mayhew said that aside from that issue, serving people with less severe illnesses through Section 17 makes them too dependent on it.

“When you have someone with an illness that isn’t the same level of severity as schizophrenia, you don’t want to create a level of dependency on these high-intensity services that would be counterproductive to their recovery,” said Mayhew.

Service providers argue that the Section 17 changes, along with the proposed reimbursement rate changes, amount to an effort by DHHS and the LePage administration to reduce costs.

“In aggregate, this is an overall cut,” said Bonnie-Jean Brooks, CEO of OHI, Inc., a mental health service provider in the Bangor area. “That’s what states are up to across the country, an overall cut. This is a nationwide issue.”

The proposed new rates will be the subject of an informational hearing scheduled for 1 p.m. Tuesday before the Legislature’s Health and Human Services Committee.

Mayhew said these initiatives are the result of years of work within DHHS.

“We’ve been long down this path before the Legislature ever weighed in,” said Mayhew. “We have begun to take seriously the responsibility of evaluating the rates of reimbursement that are being paid.”

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