LEWISTON – Despite Richardson Hollow’s sudden ultimatum that employees give up their benefits or quit, the state has been assured workers are not leaving en masse and mentally ill clients will continue to get help.

“The immediate everyone’s-going-to-leave-their-jobs sort of picture doesn’t exist,” said Brenda Harvey, commissioner of the Maine Department of Health and Human Services.

Richardson Hollow is the state’s largest in-home caregiver for people with mental illness.

In its “daily living support services” program, a trained caregiver visits clients with sometimes severe mental illness and makes sure they are taking their medication, bathing and otherwise taking care of themselves.

In an emergency meeting Friday, Richardson Hollow bosses shocked and devastated those caregivers by telling them the company was taking away their health insurance, vacation time, mileage reimbursement and other benefits because of financial problems. About 45 employees learned they had one choice: accept the loss and stay as contract help at the same wage, or quit.

The sudden move concerned DHHS, which has been scrutinizing Richardson Hollow’s finances for months and has asked for an audit of the business. Harvey worried workers would quit all at once and care would be interrupted.

On Monday morning, she met with Linda Hertell, Richardson Hollow’s founder, president and chief executive officer.

“She assured me that, other than less-than-a-handful of people, all employees are on board, working, and will continue to deliver services to our clients,” Harvey said.

DHHS said it will continue monitoring Richardson Hollow’s financial and staffing situation. If the company reaches a point where it can’t provide service, Harvey said, the department will move clients to an organization that can.

“We need to be prepared,” she said.

On Saturday, Hertell blamed much of Richardson Hollow’s financial problems on the state and its low MaineCare reimbursements, which pay the organization for the care it provides. She declined to comment further on Monday, saying in a voice mail message “Our staff needs support and healing. They don’t need to be ever more in the media and they have enough.”

But in a lengthy, detailed e-mail to some Richardson Hollow employees, Harvey and a Sun Journal reporter, Hertell said her company responsibly tried to reduce expenses, eliminate management and track productivity. Cuts in MaineCare reimbursements, she said, put the program in crisis.

“This is not a matter of management not paying attention to the problem,” she said in the e-mail. “The commissioner states that other agencies are making it with the rates we’re given. Some are, some aren’t.”

Service providers agreed that rates have been an issue for them.

“We’re all struggling with reduced funding,” said Chris Copeland, president of the Maine Association of Mental Health Services and executive director of Tri-County Mental Health Services.

Tri-County recently cut a program for children with mental illness. Sweetser, a social service agency based in Saco, laid off employees and closed homes for troubled children in six towns. Common Ties Mental Health Coalition in Lewiston stopped adding new workers.

For two years, the problem was a Medicaid billing system that caused a backlog of 550,000 unpaid reimbursement claims. Checks were routinely late or didn’t come at all.

That issue has been fixed. But this year, service providers say, the problems are the state’s plan to set up managed care and its new standardization of rates. For some programs, reimbursement rates have dropped 6.5 percent this year. Service providers expect them to drop another 13 percent next year.

“We’re being squeezed,” said Craig Phillips, executive director of Common Ties.

The state added $25 million in funding for behavioral health, according to DHHS. It expects to save $33 million through managed care and standardized rates this year.

Local service providers were dismayed by Richardson Hollow’s drastic move to stay afloat. But they weren’t surprised.

“There comes a point when you just couldn’t do it anymore,” Copeland said.