Yooper Town Hall On Impending PIHP Changes

The Michigan Advance has weighed in with some reactions to PIHP Changes from the Lower Peninsula:

https://michiganadvance.com/2025/07/15/critics-say-michigans-plan-to-open-mental-health-contracts-to-bidding-will-outsource-local-care/

Critics say Michigan’s plan to open mental health contracts to bidding will outsource local care
State health department proposal would open regional behavioral health contracts to outside nonprofits, drawing sharp opposition from local providers and advocates.
By Leah Craig - July 15, 2025

The Michigan Department of Health and Human Services is looking to open mental health services to a competitive procurement process, a move that has drawn criticism from mental health advocates and organizations across the state.

Maribeth Leonard, CEO of LifeWays– a community mental health services program that serves Hillsdale and Jackson counties– outlined how this proposal could upend Michigan’s existing system of regionally governed behavioral health oversight.

In a letter to the community. Leonard said the change in the funding model would “move decisions about mental health care funding and oversight further from the communities they serve, threatening the transparency, accountability, and responsiveness that define Michigan’s public system.”

Michigan’s current infrastructure comprises ten Prepaid Inpatient Health Plans, or PIHP. These regional administrative entities are charged with managing a region’s behavioral health Medicaid funds. The Mid-State Health Network, for example, serves 21 counties and consists of 12 different community mental health organizations, including LifeWays.

This is not the first time prepaid plans have been threatened with privatization. Indeed, there have been at least five serious attempts over the past decade. Most recently, bills introduced by Republican lawmakers in 2021 stalled in the state Legislature after encountering significant opposition from mental health advocates. Before that, in 2019, Governor Gretchen Whitmer, a Democrat, issued a line-item veto rejecting a budget provision that would have advanced a privatization pilot program first introduced under the administration of former Republican Gov. Rick Snyder.

In this instance, however, the push for privatization comes not from a Republican-led legislature, but from a department within the state’s Democratic-led executive branch: the Michigan Department of Health and Human Services.

According to MDHHS, the shift to competitive procurement is intended “to address issues within the current PIHP system that compromise service quality, accountability, and efficiency.” The department cited “fragmentation, service inconsistency, and limited accountability” as critical flaws in the current PIHP system.

The department is advancing a plan that would open the contracts for regional prepaid plans to competitive bidding, allowing large nonprofit entities with no local ties to apply. A letter from LifeWays CEO Maribeth Leonard explained that, while the proposal “requires that bidders be nonprofit entities, it still allows large private nonprofits —some of which may operate outside of our region or even our state, like Blue Cross Blue Shield or Meridian Health Plan— to take over functions currently managed by locally governed public agencies.”

The state health department conducted a month-long survey in March 2025, reaching out to 2,600 Michiganders and garnering various perspectives. In a statement to Michigan Advance, the agency elaborated that the plan for privatization was “informed by extensive feedback” from Medicaid beneficiaries and their families, community-based organizations, advocacy groups, and other partners.

In addressing the survey responses, the department said that the proposed plan would “help to increase consumer choice and access to services while preserving the Community Mental Health Services Programs (CMHSPs).”

Furthermore, the department used the survey responses to develop a four-pillared approach to their proposal, striving to “provide high quality, timely services, improve choice & consistency across regions, ensure accountability & transparency, and simplify the system with reduced bureaucracy.”

Interestingly, while both state health department and mental health advocates cite accountability, transparency, and improved response as primary objectives, they propose fundamentally different solutions to achieve them.

Leonard pointed out that the implementation of this proposal could have unintended consequences, namely increased wait times, lower service quality, decreased provider rates, and heightened rates of provider turnover and closures.

Leonard’s concerns are a reality for several other states: Oklahoma predicted that privatizing mental health care would cost the state an additional $716 million annually. A June 2024 state report from Oregon found that privatization had led to an influx of “phantom networks”—provider directories listing clinicians who aren’t actually accepting patients. North Carolina saw a drastic increase in staff turnover in public-sector mental health, as well as significant increases in behavioral health-related emergency room visits.

In a letter to Governor Gretchen Whitmer, the Michigan Association of Counties explained that private health plans operate at higher cost than their public counterparts. The current system spends approximately 2% of Medicaid funding on administrative costs, marketing, billing, and executive salaries. On the other hand, privatized infrastructures typically spend around 15% on these overhead costs.

In short, the letter continues, “such an increase would divert over $500 million annually from direct services to administrative expenses, exacerbating existing funding shortfalls and diminishing the quality and accessibility of care.”

Similarly, Leonard emphasized that even if the infrastructure is reduced, the necessity remains. The only difference, she noted, is that those in need of mental health services will end up elsewhere.

“They’re going to end up in other places–in your jails, they’re going to end up in your emergency departments,” said Leonard. “The need won’t go away.”

“The other key thing,” she added, “is that right now, the mental health code requires, on our board, the participation of those with lived experience. You’re not going to have that with a private plan.”

The Michigan Department of Health and Human Services plans to issue a request for proposal sometime this summer, with the proposed service start date scheduled for October 1, 2026. At this point, the language of the proposal has yet to be formalized.

However, Leonard noted that, based on the preliminary proposal requirements, none of Michigan’s prepaid plans would be eligible to apply. In short, another organization would be able to take control of the state’s mental and behavioral health infrastructure.

Further, she explained, shifting towards a privatized model would divert decision-making power away from the communities. Unlike the current infrastructure, private non-profits are not subject to Freedom of Information Act requests, which would leave the community with limited tools to monitor decision-making, spending, or performance. Essentially, Leonard explained, the proposal “threaten[s] the transparency, accountability, and responsiveness that define Michigan’s public system.”

LifeWays will be hosting an educational forum for state legislators on July 25 that will include a detailed briefing from the Community Mental Health Association of Michigan and the opportunity to engage with community members, local leaders, and policymakers.

More reactions, notably those from Oakland and Macomb Counties.  Note the emphasis on anecdotes, rather than data.  "The plural of anecdote is not data":

https://www.wxyz.com/news/michigan-mental-health-privatization-plan-sparks-concern-from-local-providers

Michigan mental health privatization plan sparks concern from local providers
Oakland County commissioners formally oppose the plan while Macomb County prepares similar action as service providers worry about patients falling through the cracks.
By Randy Wimbley - July 24, 2025

WARREN, Mich. (WXYZ) — The Michigan Department of Health and Human Services plans to privatize community mental health programs across the state, sparking concerns from service providers and local officials who worry the change could disrupt critical care for vulnerable residents.

William Kent credits the Crossroads Clubhouse in Warren with saving his life after a severe mental health crisis.

"When I got out of the hospital, I felt like a burnt out light bulb. I was completely broken," Kent said. "For a good chunk of a year after that, I was alone, I was isolated, I was trapped in my room with no one to talk to, not even my parents."

The Crossroads Clubhouse provided Kent with the support he desperately needed.

"It's the best thing that ever happened. It just means so much. It solved my boredom, it solved my loneliness. It gives me something to get up and do every day," Kent said.

Crossroads Clubhouse is among many community mental health service providers questioning their future as MDHHS moves forward with plans to privatize programs currently funded through Medicaid and state and federal dollars.

"It's going to lead to delays, services being denied, more paperwork," Kent said.

Bruce Dunton, program supervisor at Crossroads, fears serious consequences if the state's plan proceeds.

"My biggest fear is that this is such a huge change in the system. Too many people are going to fall through the cracks. You're going to have a significant increase in recidivism, people cycling in and out of the hospital. I think there's going to be a huge cost to the citizens," Dunton said.

Critics worry private organizations may prioritize profits over patient care.

MDHHS defends the plan, saying it will address issues in community mental health programs including service quality, accountability and efficiency — problems they claim to have identified through a survey of Medicaid beneficiaries and their families.

"The proposed bidding process is designed to mitigate these issues by establishing a more streamlined, transparent and equitable behavioral health framework," Lynn Sutfin, an MDHHS spokesperson, said in a statement.

Local governments are pushing back against the state's initiative. The Oakland County Board of Commissioners recently passed a resolution opposing the plan and urging Gov. Gretchen Whitmer, MDHHS and the Legislature to abandon it.

Macomb County lawmakers from both political parties plan to follow suit with similar opposition.

"Here in Macomb, we're doing the right thing: we're serving our people, everything here is local, we have local partnerships, we have fantastic partnerships and we don't want to lose any of that. This proposal would hurt that," said Phil Kraft, a Republican Macomb County commissioner.

"This is not a partisan issue; this is a people issue and we want to make sure the residents of Macomb County receive the care they deserve," said Michael J. Howard, a Democratic Macomb County commissioner.

The Detroit Wayne Integrated Health Network, which serves approximately 123,000 children and adults, emphasized their commitment to the community in a statement: "We understand the immense responsibility we have been given and we go above and beyond in supporting the people we serve and the hundreds of Providers in our System of Care."

MDHHS plans to request bids to run community mental health service programs this summer, with a target service start date of October next year.

You can read the full MDHHS statement below:

"The Michigan Department of Health and Human Services (MDHHS) is changing to a competitive procurement process for the state’s Prepaid Inpatient Health Plan (PIHP) contracts to help ensure Michigan Medicaid beneficiaries have access to behavioral health care services when and where they need them.

"MDHHS proposed the competitive bidding process to address issues within the current PIHP system that compromise service quality, accountability and efficiency. Informed by extensive feedback collected [michigan.gov] through a recent survey of Medicaid beneficiaries and their families, advocacy groups, community-based organizations and other partners, MDHHS identified several issues in the 10-region structure – fragmentation, service inconsistency, and limited accountability.

"The proposed bidding process is designed to mitigate these issues by establishing a more streamlined, transparent and equitable behavioral health framework that better serves Michigan residents and address conflicts of interest that exist within the current system."