Cenpatico Integrated Care has retroactively reduced funding levels for many of its contracted Southern Arizona behavioral health providers.

The reductions — combined, in some cases, with sanctions for failing to meet benchmarks and canceled monthly funding for providers falling short of production quotas — are causing upheaval at Tucson agencies that provide mental health care, and sometimes medical care, for low-income adults and children enrolled in the state’s Medicaid program, AHCCCS.

Cenpatico — a for-profit subsidiary of publicly traded Centene Corp., based in St. Louis — distributes federal Medicaid funds through contracts with more than 100 provider agencies in Southern Arizona. The company would not respond to questions about how many agencies’ contracts were cut, or whether the agencies have had to scale back staffing or services in response.

Cenpatico pays behavioral health providers up-front each month, using a predetermined amount based on the amount of services the agency provided in the past. The contract changes were based on a midyear review of insurance claims agencies have submitted to the company since October.

Contracts are being reduced for agencies whose claims submitted to Cenpatico were less than the amount they received from the insurer.

Details on how the changes are affecting local agencies and their clients are hard to come by, especially related to agencies that rely most heavily on Cenpatico’s contract for their revenue stream.

Five Tucson behavioral health agencies reached by the Star — CODAC, COPE Community Services, Assurance Health and Wellness Center, Pasadera Behavioral Health and HOPE, Inc. — declined interview requests regarding the effects of the reductions.

In an email, Fletcher McCusker, CEO of Assurance’s parent company, Sinfonia HealthCare Corp., said only, “We are working though our contract with them. We will not know until July the impact.”

Cenpatico officials canceled an interview with the Star about the contract changes last week, and instead sent a statement via email:

“Cenpatico Integrated Care prepays providers with block payments to cover the services to our members. When providers do not spend 100 percent of that payment on services, we reduce the amount in their next payment until they catch up. We have the right and obligation to do this to ensure that funds are distributed appropriately among providers who see our patients. Members have a choice on who they go to for services, so the dollars follow the members’ choices.”

“BUMPS IN THE ROAD”

The recent contract adjustments weren’t totally unexpected, said Clarke Romans, executive director of the Southern Arizona division of the National Alliance on Mental Illness, or NAMI. At the outset, Cenpatico said it would re-evaluate the amounts it allocates to agencies during the contract period, based on the value of claims agencies ended up submitting to Cenpatico.

Romans said he’s insulated from the pressures facing other providers who rely on Cenpatico for the bulk of their business. NAMI Southern Arizona gets about one-third of its funding through the Cenpatico contract.

If necessary, the advocacy group could survive, albeit on a smaller scale, without the contract, Romans said. NAMI is staffed largely by volunteers and gets funding from donations, grants and fundraisers like its annual walk-a-thon.

“If Cenpatico cut us off at the knees, we would be hurting,” he said. “But as I told them and everybody else, we’re not going to go away.”

At La Frontera, one of the biggest Tucson agencies that contracts with Cenpatico, contract reductions haven’t led to layoffs, said CEO Dan Ranieri.

“Any reductions we’re experiencing were planned for,” he said. “We’re still going to have some bumps in the road for a while, and we’re all kind of learning as we go.”

CATCH-22

The public mental health system in Arizona is evolving. This year, AHCCCS absorbed the state Division of Behavioral Health Services. To administer federal funds, AHCCCS now contracts directly with Cenpatico and two other regional behavioral health authorities. The RBHAs, pronounced “reebas,” act as managed care companies, distributing funds to ground-level providers who treat patients.

Under the state’s new “integrated care” model, adults with serious mental illness also can get their physical health care covered by Cenpatico and its newly contracted medical providers.

But the RBHA payment set-up has conflicting incentives, said Neal Cash, president and CEO of Community Partners, Inc., formerly known as Community Partnership of Southern Arizona. The nonprofit, Tucson-based company was the Pima County’s RBHA for 20 years before Cenpatico won the contract.

Cash says Cenpatico and AHCCCS want providers to avoid unnecessary hospitalizations and high-level, costly services if care at home or in the community would work just as well.

But alternatives to high-cost treatments are billed at much lower rates, making it harder to reach billing expectations that stem from AHCCCS’ payment structure.

At Community Partners, which does a lot of wraparound, in-home care for patients, “you have to churn out so much more” to meet the billing expectations, he said. “We need to shift to a better aligned system that values outcomes.”

An evolution in the payment incentives isn’t far off, he said.

AHCCCS is aware of the Catch-22 in the payment structure, and has been looking to improve it. It plans to move away from the RBHA system’s predetermined “block payment” model to what is known as “value-based purchasing” — paying health-care providers based on outcomes and quality-of-care measures.

“Our concern with the block system is lack of transparency and inflexibility, with respect to changing member needs,” Monica Coury, AHCCCS spokeswoman, said in an email, “because providers are focused on managing to the amount paid in their block rather than assuring open access to services.”

HOLDING BACK REFERRALS

Some of NAMI Southern Arizona’s most popular programs, like support and education groups for people with mental illness and their loved ones, are struggling in the new climate, Romans said. NAMI only gets paid for those services if participants get a referral from bigger agencies like CODAC or COPE. And those referrals are harder to come by today, Romans said.

“The organizations are all threatened financially, so their instinct is to see if they can meet the clients’ need from within their own organization, rather than referring the client out,” he said.

Romans said he’s inspired by Cenpatico’s ambitious goals, such as improving the drastically reduced life expectancy for people with serious mental illness. His son, who had schizophrenia, died at age 37.

“Cenpatico has as a goal to improve life expectancy by 11 years,” he said. “That almost seems fantasy, but if they can make it happen, that would be terrific.”

But in the meantime, public behavioral health providers will have to adjust to Cenpatico’s heightened expectations and demands for accountability.

Just 25 percent of the Easter Seals Blake Foundation’s business is tied to its Cenpatico contract, and the agency had only a minimal reduction in its $12 million contract, said CEO Ema Kammeyer.

But dealing with all the changes under the new RBHA has been “majorly” stressful, she said.

While Kammeyer says she respects Cenpatico’s focus on accountability, it’s been a challenge to hire the staff necessary to meet their reporting requirements while generating the revenue to pay for them.

“There has been a level of oversight mandated that was never the case before,” she said. “We’ve had to hire at least 10 to 12 administrative positions we didn’t have before.”

Kammeyer said she’s looking at the changes as a net positive.

“I don’t perceive any injustice in the system or any inequity,” she said. “They ask a lot of us, but I have the feeling the genuinely want to make this work for the families and consumers and the providers.”

Cash called the changes “disruptive innovation.”

The behavioral health system “is undergoing a great deal of change and transition,” he said. “Some providers may do well, and others won’t. This process is never easy.”

Romans says it’s easier for CEOs and behavioral health staffers to weather upheaval in the public mental health system than it is for their clients.

“The people who end up paying the price for disruption and chaos in the system are the people we’re supposed to be serving,” Romans said. “That’s what troubles me more than anything.”

Contact reporter Emily Bregel at ebregel@tucson.com or 573-4233. On Twitter: @EmilyBregel