Youth Home, which provides mental health services, announced today it is laying off 31 of 227 employees and reducing services to cope with financial losses tied to a continuing freeze in Medicaid reimbursements for mental health services.

Youth Home has provide residential and community services for youths since 1966 and also has a related organization, Behavioral Health Services, that has an outpatient clinic for all ages.

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David Napier, CEO of Youth Home, said the layoffs result from a “challenging health care climate. The agency said in a prepared release:

The layoffs will include both administrative and direct-care staff who work primarily in the residential psychiatric care program on Youth Home’s 52-acre campus located on Colonel Glenn. While the need for this program has not diminished, it is primarily funded through Medicaid, which has not provided a reimbursement increase for provided services since 2001. This rate freeze has translated to the program losing money for over a decade. Youth Home tries to make up this shortfall through fundraising and developing other programs. The downsizing will mean the closing of one residential cottage and a reduction of available beds. Four residential houses on the campus will remain operational for now, as well as the community-based care residence for teens living in the Beth Cartwright House.

“These steps do not necessarily mean our organization will stop losing money but it does ensure that our mission can continue on a slightly smaller scale for some time to come. This slows the financial loss and these painful cuts allow us the opportunity to reorganize, reserve resources, explore new programs, and continue to provide a broad range of vital services for families from all over the state,” Napier said.

He said there’d been no reduction in the need for services.

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I’m seeking reaction from the Department of Human Services, which administers Medicaid-funded programs in the state.

Benji Hardy, who’s written at length about the changing shape of health services in Arkansas, notes that the changes include a shift to managed care reimbursement that some have seen as favoring individual therapists over larger behavioral health agencies. I can’t say if this figures in the Youth Home decision. There are different funding streams for different types of services.

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Last fall, however, DHS said that the reforms wouldn’t reduce access for beneficiaries, in part thanks to higher rates for individual therapists who can provide services without being part of a larger agency.

UPDATE: Marci Manley at DHS provided this response to some of the general issues raised here:

The focus of the Arkansas Department of Human Services has been to expand services in home- and community-based settings for children and youth in an effort to shift from a reliance on long-term residential settings to a move to provide services in the least restrictive setting. Therefore, reimbursement rates for long-term residential treatment facilities for youth and children have not seen an increase.

We have focused our investments in developing and providing services in the least restrictive settings, to hopefully prevent the development of chronic, long-term mental health needs that residential services often serve by making access to outpatient services available to children and youth, in addition to increasing providers in that field across the state.

In the development of the Outpatient Behavioral Health program for outpatient counseling services and the Provider-led Arkansas Shared Savings Entity (PASSE) program to serve clients with higher mental health needs, the goal has been to expand access and providers in the community to offer a continuum of care to prevent the need for long-term residential facilities.

DHS also anticipates that the PASSE program will offer flexibility for PASSEs to contract with residential service providers to provide specialized services, allow PASSEs to incentivize providers with rates based on outcomes or other factors that might allow for higher, value-based rates for individual providers; and allow providers to transition residential facilities to other services.

“Demand” for a service is difficult to determine accurately, however given the emphasis and shift to make home- and community-based services available and more accessible, the need for residential services could likely become more specialized. By offering a wider range of services from counseling, high need, and residential, we hope to ensure that children and youth receive the right level of services in the right setting at the right time.