
What’s Happening?
PIHPs in Michigan have already shared financial projections with the Michigan Department of Health and Human Services (MDHHS) and possibly with legislative leaders. These projections indicate serious systemic pressures on Medicaid margins, which could lead to significant budget deficits and reductions in critical services. However, the Medicaid capitation rates for FY25 have yet to be released, leaving many unanswered questions about the funding levels that will be available.
There’s already evidence of these funding challenges: some CMHs and PIHPs are compensating for deficits by cutting reimbursement rates to providers. Unfortunately, these cuts are creating a ripple effect, threatening provider financial health, access to services, and the quality of care available to the individuals who rely on them.
The Broader Impact
These funding reductions are reminiscent of the financial difficulties the system faced between 2016 and 2018. At that time, similar cuts led to the K.B. vs. Lyons lawsuit against MDHHS, in which reduced rates for home and community-based services (HCBS) caused many providers to stop contracting with local CMHs. Fast forward to today, and we are already seeing these challenges emerge in Oakland County, where provider cuts are raising concerns about the broader stability of the system statewide.
While a revised FY24 Medicaid rate increase aimed to address a $116 million revenue gap, the actual increase fell short of expectations. With only $40 million allocated due to discrepancies in the enrollment mix, the funding gap remains wide.
Why It Matters Now
Recent Medicaid redeterminations are placing enrollees into less suitable eligibility categories, further contributing to the loss of much-needed funds. Some PIHPs are projecting deficits as large as $23 million for this year alone, with a growing number of individuals seeking services for mental health conditions, substance use disorders, and developmental disabilities.
The primary reasons for the revenue reductions include:
- Medicaid redeterminations assigning enrollees to inappropriate categories.
- Incorrect waiver placements for previously eligible individuals.
- The loss of over 60,000 Medicaid eligibles from specific categories like Disabled Adult Beneficiaries (DABs).
- The end of pandemic-related federal and state funding.
- An increase in demand for mental health services.
These financial challenges are not just numbers on a spreadsheet—they represent real risks to the people who rely on Michigan’s public mental health system.
Our Call for Action
We are urging MDHHS to take immediate steps to address these concerns. As part of a coalition of disability rights organizations, we are advocating for solutions that will protect the critical services people with disabilities need to live independent, fulfilling lives. These solutions include:
- Standardizing reimbursement rates for HCBS services, ensuring that Direct Care Workers earn no less than $20 per hour, which should be reflected in Medicaid capitation rates.
- Securing Medicaid funding for services like Community Living Supports (CLS), respite care, supported employment, and specialized residential services, similar to the separate payment allocated for the autism benefit.
- Implementing reporting requirements for these services to monitor authorization and payment by PIHPs and MDHHS.
We believe these steps are necessary to maintain a strong, sustainable public mental health system in Michigan. The current situation in Oakland County, where provider cuts are already being felt, signals a potential statewide crisis if these issues are not resolved.
A Collaborative Approach
While much of the funding is controlled by the Michigan Legislature, MDHHS plays a significant role in determining how funds are allocated. We are ready and willing to work with MDHHS to ensure the CMH system receives adequate funding. In the spirit of collaboration, we respectfully request a meeting with MDHHS leadership to discuss these critical funding challenges and work together toward viable solutions.
Our mission is to advocate for individuals with disabilities, ensuring that they receive the services and support they need. We will continue to fight for a public mental health system that is both equitable and sustainable, one that upholds the dignity and rights of those it serves.
If you’d like to stay informed on these important issues or lend your voice to the cause, be sure to follow us on social media or subscribe to our newsletter for updates on Medicaid funding and other advocacy efforts.
Join Us in Advocating for Change!
Now, more than ever, it is vital that we stand together to ensure that Michigan’s public mental health system gets the support it needs.