Lower Medicaid payments and Juneau Youth Services' own billing problems have forced the agency to scale back construction plans, dip into savings and reduce employee benefits, officials said.
Juneau Youth Services, a nonprofit mental-health services provider, employs about 95 people. It offers residential and in-school services for emotionally disturbed youths, a program for underage drinkers, transitional housing for people 16 to 18, a family mental health center and an emergency shelter, among other services.
But the agency faced a $387,000 shortfall in revenues for the first six months of this fiscal year out of an annual budget of about $5.7 million. It had about $1.4 million in reserves earlier this year.
"We expect to end the (fiscal) year with a deficit," board President Mary Alice McKeen said. "We expect we will have to spend some of our reserves."
The board of directors this winter brought back former longtime Executive Director Jody Engelman as the interim director. She replaced Chuck Bennett, who resigned in January.
"My job is to get it financially in the right road," Engelman said.
Engelman said she doesn't intend to reduce services or cut programs. But some staff have left in the past year and weren't replaced. And a program for emotionally disturbed middle school students was dropped before this school year because of the tight budget.
The Lakeside program provided an off-site classroom for about a dozen students who were very disruptive in school or had chronic absenteeism because of substance abuse, said Dzantik'i Heeni Middle School Principal Les Morse.
Without the program, those students are in regular classrooms and are more likely to be suspended, he said.
"Teachers really do strive to be successful with them in class, but it's difficult with the number of students they have," Morse said.
Morse said Juneau Youth Services no longer offers after-school activities with a therapist, and two school years ago it dropped an in-school classroom for emotionally disturbed students who weren't disruptive but needed a small setting to do well academically.
Juneau Youth Services gets about half its revenue from Medicaid, and about half from city, state and federal grants.
The Juneau agency isn't alone in its budget problems. Nearly all mental-health providers in Alaska would say they are getting the same or less reimbursement from Medicaid, following new state rules imposed between November 2000 and March 2001, said Dan Weigman of the state Division of Mental Health and Developmental Disabilities.
"A number of mental-health providers are having to tighten their belts," he said.
The changes follow two state audits that recommended, among other changes, the state clearly define Medicaid-eligible services and ensure reasonable rates. Medicaid is funded by the state and federal governments.
The broadly worded former rules left room for providers to bill for services Medicaid didn't intend to pay for, Weigman said.
For instance, a reimbursement category called activity therapy was intended to refer to teaching clients skills to avoid specific disruptive behavior. But it was being used for any sort of activity, such as taking a client to a movie to get practice in social settings, he said.
The rules also emphasize providers show the medical necessity of a treatment, Weigman said.
In some cases, providers weren't assessing clients' behavior with enough specificity to tie the treatment plan to each of the problem behaviors, Weigman said. Some of that may have been due to a lack of documentation in the clinicians' notes. But some of it was caused by unfocused treatment itself, he said.
He likened it to a mechanic who wouldn't diagnose the glitch. "You don't want somebody working on your car without identifying what's wrong with it."
The reduced revenues have limited Juneau Youth Service's ability to develop a 150-acre campus at Montana Creek, Assistant Executive Director Pat Quigley said.
One 16-bed facility has been built. But plans called for building four 10-bed cottages for residential treatment, a half-sized gym and several classrooms.
"How we can get to that now is pretty iffy," Quigley said. "Even though we aren't going to go under, we don't have the options we had two years ago."
The money shortfalls also stem from the organization's own difficulties in billing for everything it was entitled to, Juneau Youth Services officials said.
"We weren't billing as much as we should have, and we weren't getting as much back as we should have," said board president McKeen.
Billing "can be vastly complicated, really," Quigley said. "The system has to work well, or you're in a quagmire."
Juneau Youth Services has improved its staff training in how to bill Medicaid, simplified its flow of paperwork, and bought better computer software, managers said. Bills are sent electronically to a claims company that holds a state contract to process Medicaid payments.
The changes in Medicaid rules will cost LifeQuest, a Wasilla-based community mental health center, about $500,000 from its $7.5 million budget, forcing the shutdown of one program, said CEO Bill Hogan.
The program helped 60 to 100 children a year learn skills such as managing anger and resolving conflicts, he said.
The Gateway Center for Human Services in Ketchikan has cut back on staffing and eliminated a vocational workshop that served about 10 chronically mentally ill adults, said Director Ron Adler.
Hogan said the former rules were more general, and he understood why the state wanted to be sure public funds were used wisely. But Medicaid rules are complicated and expensive to follow, he said.
"If you come through the door and are depressed, you have to go through an hour-and-a-half assessment, and you might see the doctor that day or not," Hogan said.
Clients might face a further one-hour assessment if they need rehabilitation or a case manager to guide them through the system, he said. People seeking other types of medical help don't spend two and a half hours just explaining what's wrong with them, he said.
"The whole system is overregulated, and it's created barriers," Hogan said. "It's just not client- or consumer-friendly."
Adler, also president of the Alaska Community Mental Health Services Association, said many of the rule changes were favorable, such as by creating more options for intensive services.
And he credited the state with helping to reduce some delays in getting state grants and Medicaid reimbursements. But he said the financial viability of mental health providers remains a major issue.
"The cost of health care keeps going up," Adler said. "The medicines that are being prescribed are far more expensive than last year and years ago."