Maryland’s Mental Health System May Run Out of FY 2001 Funds By Late Spring

A Maryland legislative budget analyst warned lawmakers on Feb. 13 that the state's mental health system will reach a $42 million deficit this year, possibly leaving it unable to pay providers, the Baltimore Sun reports. Speaking before a House Appropriations subcommittee, Simon Powell said that the state Mental Hygiene Administration will likely spend all of its appropriation for fiscal year 2001 by May or June, rendering the agency unable to make payments to providers until it receives its allocation for fiscal year 2002, which begins July 1 (Barker, Baltimore Sun, 2/14). The agency current's deficit, which stands at $23 million but is projected to grow an additional $19 million this fiscal year, stems from the state mental health system's 1997 switch from a grant-based payment method to a fee-for-service method, which has resulted in a backlog of claims (see the 2/13 Kaiser Daily Health Policy Report for more on this problem). Powell recommended that state lawmakers use a $2 million allocation, which Gov. Parris Glendening (D) proposed for school-based mental health programs, to pay down the system's existing debt (Mosk, Washington Post, 2/14). Dr. Georges Benjamin, secretary of health and mental hygiene, said that the mental health agency "has instituted a series of cost-containment measures," including enrolling "as many [mental health] patients as possible" in Medicaid, thereby increasing federal contributions into the system. He acknowledged, however, that "some" treatment centers will "probably" be forced to close due to the financial crisis (Baltimore Sun, 2/14). The subcommittee heard from several representatives of such centers, who "pleaded with lawmakers" to ask Glendening for additional mental health funding and warned that their financial difficulties threatened the quality of care for mental health patients (Washington Post, 2/14).