Michigan’s public mental health plans filed a lawsuit accusing the state’s Department of Health and Human Services of imposing unnegotiated contract terms and threatening to cut off funding.
The plans, known as prepaid inpatient health plans argued DHHS’ actions violate state law and jeopardize mental health and substance use disorder services for thousands of residents.
“This isn’t just a contract dispute – it’s about ensuring the stability of behavioral health services that families across the state rely on every day,” said Robert Sheehan, chief executive officer of Community Mental Health Association of Michigan.
The six-count complaint, filed on behalf of NorthCare Network Mental Health Care Entity and Northern Michigan Regional Entity in the Court of Claims, alleges in part violation of the Headlee Amendment, and the PIHPs seek a writ compelling the state to continue providing Medicaid and general funds to the PIHPs as well as retraction of any communications and actions “taken to terminate the relationship between DHHS and plaintiffs.”
The plaintiffs, who want a preliminary injunction prohibiting DHHS from withholding substance abuse disorder health home services funding, also want a hearing to dispute DHHS’ decision to terminate contracts and they seek unspecified damages.
DHHS said in a late statement that “the Michigan Department of Health and Human Services is committed to ensuring Michigan Medicaid beneficiaries can access behavioral health and substance use disorder treatment. While we can’t comment on the pending litigation, Michigan families continue to receive care and MDHHS is funding all 10 Pre-Paid Inpatient Health Plans.”
According to the complaint filed by plaintiffs’ attorney, Christopher J. Ryan, DHHS “threatened to terminate” its relationship with the plaintiffs, including Region 10 PIHP, by Oct. 31 if they did not sign a fiscal year 2025 contract.
Plaintiffs signed a revised contract that they said modified DHHS’ “offending provisions,” but DHHS refused to sign. Instead, the plaintiffs claim, DHHS made “good on its threat by withholding Medicaid funds” owed to the plaintiffs.
The alleged offending provisions included DHHS’ proposal to cap public mental health plans’ risk reserves at 7.5% of annual revenues, which the plaintiffs argue disregards actuarial recommendations.
The plaintiffs also alleged DHHS wanted to shift the financial burden of managing certified community behavioral health clinics to the plaintiffs without funding from the state, which violates the Michigan Constitution.
“We’re standing up for fairness, fiscal responsibility, and most importantly, the people who depend on these services,” Sheehan said. “Michigan families deserve better.”
This story courtesy of MIRS, a Lansing-based news and information service.