Executive Summary

Issue Area 1: Fee-for-Service Payments made Directly by Clients and their Private Insurers are not an Under-Utilized Source of Revenue for Behavioral Health Services.

The Legislative Auditor conducted a survey of the 18 comprehensive behavioral health centers in West Virginia. The survey involved gathering data for private sources of revenue, accounts receivable from clients and third-parties, and total annual revenue for fiscal years 1998, 1999, and 2000. The private sources of revenue consist primarily of payments made by behavioral health clients and third-party payments. The data indicate that revenue from private sources constitutes a relatively small portion of total revenues for CBHCs. Centers serving only persons with mental retardation and/or developmental disabilities do not collect fees from clients. The Legislative Auditor's analysis of the survey revealed that, overall, the amount of private source revenue and accounts receivable fluctuated from year to year but remained a relatively small proportion of total revenues for most responding centers.

The writing off of accounts receivable is a standard procedure after fees are owed for a certain period of time. The percentage and the age of receivables written off varies from center to center according to their individual accounting practices. Data on write offs were obtained from seven CBHCs. Those seven centers were divided between two categories with one exception: three centers that wrote off approximately 70%-80% of private pay receivables and those that wrote off approximately 40%. One center wrote off an average of nearly 50% of private pay accounts during the three years examined.

It is clear that a large percentage of private pay receivables are routinely written off by providers each year, although the percentages vary widely among providers. This further demonstrates the inability of many clients to pay for services rendered to them. In addition, it appears that write offs from private pay sources account for a disproportionate share of all amounts written off by CBHCs each year. Although a large percentage of private pay debt is written off each year by CBHCs, the OBHS does provide additional funding to support services for which providers are not otherwise compensated. This includes uncompensated care funding amounting to $3,000,000 each year during fiscal years 1998, 1999, and 2000.

Analysis of statewide adult client demographic data indicates clear patterns with respect to client characteristics (see Table 2). For FY 2000, only 55.96% of clients owned or rented their own house or apartment. Another 5.59% relied on subsidized rental. Other clients, constituting 20.15% of the total, lived in the home of a relative. Other smaller categories of living arrangements included living in a friend's home, group homes, supported apartments, foster care homes, halfway houses, adult family care facilities, and residential group treatment facilities. It is clear that a large segment of the client population does not live independently.

Also, a correlation analysis was conducted on various client variables. The analysis indicated a relatively strong correlation coefficient of +0.64 between county poverty rates and the percentage of county population who are behavioral health clients. This correlation indicates that counties with high poverty rates usually have a high proportion of behavioral health clients. This also suggests a relatively low ability to pay of many clients of behavioral health facilities.

Some conclusions can be drawn from the data. It is clear that at any given time approximately 1/5 of clients are employed in competitive work. Between 10 to 14% of clients are not employed and are not currently looking for employment. Another 7 to 8.5% of clients are unemployed and looking for employment. Around 7% of clients are physically impaired, while 2% are retired. This means that during FY 2000, nearly 70% of clients were either unemployed or were limited by age and physical impairment in their ability to become employed.

The unemployment rate for clients does not compare favorably with that for the State as a whole. The average unemployment rate for the State was only 6.7% in both fiscal years 1998 and 1999 while it fell to only 6% in fiscal year 2000. This contrasts strongly with the fact that a maximum of only 20% of clients were employed in competitive work during the three years examined. Over half of clients are routinely not a part of the labor force.

The percentage of clients with Medicaid as their insurance coverage (see Table 4) is another measure of their economic status. Approximately half of adult clients, 51.2%, are covered by Medicaid each year, as are over 80% of children. This illustrates the behavioral health system's strong reliance on Medicaid funding as was discussed in the first installment of this review. This statistic also indicates that a large proportion of behavioral health clients are indigent. The proportion of behavioral health clients who are Medicaid recipients greatly exceeds the percentage of the State's total population who are Medicaid recipients. During FY 2000, out of an estimated population of 1,806,928 a total of 337,433 (18.7%) West Virginians were Medicaid recipients. In both fiscal years 1998 and 1999, 18.9% of the State's population were recipients.