RALEIGH, N.C. - More than a decade after North Carolina drastically changed its mental-health system, fewer patients are treated in state psychiatric hospitals, but more are crowding local hospital emergency rooms.

More money is going to pay for community treatment, most of it coming from Medicaid. But finding the proper treatment can be a time-consuming and confusing puzzle for the patients who are most difficult to serve, those on the fence between intensive in-home help and a state-run institution.

The move to more community care for the mentally ill was supposed to improve treatment, but despite various initiatives and money, those who need help are still struggling to get the care and medicine they need.

The most recent change, two years in the making, was just completed. It organizes the state's 100 counties into 11 regional organizations that operate much like managed-care insurance companies.

Patients and their advocates say the new system has created barriers to care, separating hundreds of mentally ill patients from their longtime doctors and causing some doctors to stop seeing Medicaid patients completely.

Meanwhile, patients clog hospital emergency rooms, sometimes for days, waiting for an open spot in a state psychiatric hospital. Since 2007, the number of mental-health patients seeking help in emergency rooms has risen 16 percent.

And legislators, a year after closing Dorothea Dix Hospital in Raleigh, are thinking about building a new state psychiatric hospital in the south-central region of the state to serve residents of Mecklenburg, Union and other nearby counties.

Gov. Pat McCrory has called the state's mental-health system broken but included no money in the state budget for new mental-health initiatives. As it is, the state and federal governments are spending nearly $3 billion on community care and three psychiatric hospitals this year.

Carol Steckel, the state's new Medicaid director, acknowledges there are problems but said the state and the managed-care organizations are working to fix them.

"If you look at any state that has done a statewide implementation that changes the way we do business, you're going to run into issues," she said. "Even though you try to anticipate everything before you flip the switch, there are always going to be issues. So what you see are those blips popping up, and then you see the team coming together" from the regional agency and the state "looking to resolve those issues."

A teen's struggle

Laci Brown, 19, has bipolar disorder and mild mental retardation. She has been in and out of state and local hospitals, a group home, a special state school in Durham for mentally ill children, and a residential school in Virginia for developmentally disabled students. Brown has run through many of the community treatment options the state offers.

Her mother, Linda Brown Palmer, counts 35 hospitalizations and placements in all, beginning when Laci was 7.

"It's just been a cycle, from when she can't be managed at home and whatever service is left after all the cuts and cuts and cuts," Palmer said.

A memory that Brown calls "the saddest thing" was celebrating her 18th birthday in Central Regional Hospital in Butner, the state's newest mental-health facility. She spent seven months there last year. She got a birthday cake at the hospital but also had to move out of the children's unit. "I was a little kid. I had to get moved to the adult section," she said.

She's also received a range of community health treatments and now gets the most advanced service -one step away from hospitalization - that includes weekly visits by a nurse, a therapist and a peer support specialist and a monthly visit to the doctor.

Brown's in-home therapy is a result of a 2001 law that moved treatment from government to local providers. Despite that law, Palmer had to turn to lawyers from Disability Rights North Carolina this year to fight to have the service extended through August.

"Every time they say, 'Sorry, we can't help you. You need a more intensive kind of help,' " Palmer said. Even getting all the medicine her daughter needs hasn't always been easy. For about six months last year, Brown lost her Medicaid insurance, and her mother had to search for ways to provide the 18 pills her daughter takes daily.

Enter managed care

Community mental-health programs served more than 360,000 people in 12 months between July 1, 2010, and June 30, 2011, an increase of about 46 percent over 2001, according to state figures.

But the cost of such care was high: $2.4 billion from state, local and federal governments in 2011, double the cost from 10 years earlier. Lawmakers, looking to control spending, opted to go to a managed-care system under a law passed in 2011.

The idea was to save money by giving local managers more control over how much treatment people receive and who the government pays to provide it. Each managed-care organization gets a set amount of state and Medicaid money for each patient, and administrators are responsible for making sure they don't outspend their budgets.

The system, which has been phased in over a year, is already being criticized.

Allowing each of the 11 regions to select its providers and requiring the mental-health administrators to keep close tabs on them means limited flexibility for patients, said John Rittelmeyer, litigation director for Disability Rights, the Raleigh-based advocacy group.

"We've created 11 different systems that don't really talk to each other," he said.

Gaile and Thomas Osborne have wrestled with the new system as they've tried to get help for their two children.

In 2011, the Osbornes became foster parents to a 2-year-old boy and a 4-year-old girl from Alamance County and moved them to their home about 190 miles away in Buncombe County. The Osbornes went on to adopt the children.

Their daughter was receiving mental-health services in her former foster home, and the Osbornes wanted such care to continue in Buncombe. Medicaid continues to pay for the mental-health treatment so potential adoptive parents aren't put off by the expensive treatment the children may need.

But the Osborne children had first received Medicaid in Alamance, a county that's part of an insurance district run by Cardinal Innovations Healthcare Solutions, and the Osbornes could not find a therapist near their home that was in Cardinal's network of doctors.

Although the state is not keeping track of how often patients have found themselves stranded outside their insurance district, officials say that they hear it's happening all over the state. Among the anecdotes shared:

• Adults have had to move from a group home that was outside their insurance district's jurisdiction.

• An adoptive mother in Vance County is having trouble finding treatment for her children because the children moved from one district to another.

• A clubhouse for mentally ill residents in Durham decided to allow one of its members to attend for free because of the hurdles it would have had to jump to collect payments from another region.

The Osbornes paid out of pocket for half of their children's mental-health care under an agreement with their therapist. They submitted bills to Cardinal, hoping for reimbursement. The therapist worked for weeks to be certified by Cardinal so she can receive payments from the agency.

"It's just been a nightmare," Gaile Osborne said.