A month before Mecklenburg County was set to oversee millions in federal Medicaid money for mental health services, a state official has assigned the work to a Kannapolis-based healthcare management firm.

County officials say the move could force them to lay off more than 100 employees they hired to manage more than $235 million in federal, state and county money. The county also could lose the $3 million it has spent preparing to run the program.

Mecklenburg officials had sought to take over the program from the state in 2010, and thought they were prepared to get it running by Feb. 1.

But Albert Delia, the acting N.C. Health and Human Services secretary, wrote county officials Monday to say that recent reviews by a consulting firm found that Mecklenburg wouldn’t be ready by that date.

So Delia, who’ll soon be leaving office, assigned Cardinal Innovations Healthcare Solutions to manage those funds.

At stake is $200 million a year in federal money, $20 million in county money and $15.3 million the county gets from the state. The money finances programs that in 2011 served more than 55,000 Mecklenburg residents with mental health and substance abuse issues, as well as intellectual and developmental disabilities.

Cardinal would earn about $20 million annually in administrative fees, said Philip Endress, head of MeckLINK Behavioral Healthcare, formerly the county’s mental health department.

County officials planned for MeckLINK to oversee the Medicaid program. They have spent about $3 million preparing to take over the job from the state. In August, the county hired Endress to head MeckLINK.

Since then, he has hired 131 staffers – in addition to 73 already working for MeckLINK – to make it all work.

Wednesday, Endress said in a brief interview that he’s adamant the program can “go live” on Feb. 1.

“We will be able to take phone calls from consumers and providers, we will be able to pay our bills and we will be able to write reports to the state – all three functions of a managed care organization,” said Endress, who came from Buffalo, N.Y., with 30 years of behavioral health care experience. “And we will be able to do that by Feb. 1.”

Delia was required to make a decision by Dec. 31 about Mecklenburg’s readiness to administer the program by Feb. 1.

County officials thought they had more time. The official “live date” was supposed to be July 1, according to Mecklenburg general manager Michelle Lancaster.

To determine the county’s readiness, the state sent the consulting firm to Mecklenburg in August and November, and a final time Dec. 20. The consultants found problems with “the financial structure and IT structure,” Lancaster said in an interview.

“We are inputting a new (computer) system. Our old system couldn’t handle the volume we’re anticipating,” Lancaster said.

In a letter Monday to Endress, Delia wrote that the consultants determined that “despite positive progress, MeckLINK will be unable to begin operating under the waivers” by Feb. 1.

Yet in another letter the same day to two state lawmakers, Delia wrote that the consultants believed that if MeckLINK were to continue its preparations “they would be successful in assuming operations” by April 1 – or three months before what the county says is the official start date.

He acknowledged that MeckLINK could start sooner than Cardinal.

“We’re not searching for the ‘why’ of Secretary Delia’s decision, we’re trying to figure out who gets to make the decision: ‘Can we move forward or not?’ ” Lancaster said. “We feel we should be allowed to continue toward implementation.”

On Wednesday, Cardinal sent out a press release announcing Delia’s decision.

The Concord-based company, which manages Medicaid waiver programs for 15 N.C. counties, said it looked forward to working with the state, MeckLINK and Mecklenburg officials and residents “on the transition process and to a timely waiver implementation.”

‘Until we are told not to’

County Manager Harry Jones told Mecklenburg commissioners at their meeting Wednesday that MeckLINK would continue its preparations “until we are told not to continue down that path.”

Jones said he was caught off guard by Delia’s decision since MeckLINK could “get up and running” long before the 120 to 180 days it would take Cardinal to begin managing the funds.

“We’ve invested too much to walk away,” Jones said.

The county manager said he wants the county to “stay above the fray” and not pick a fight with Cardinal.

Meantime, he and Lancaster will continue to pursue answers – and relief – from state officials.

‘People’s lives are at stake’

Commissioners were perplexed by the news.

“I am struggling … if this makes any sense whatsoever,” at-large Commissioner Trevor Fuller said. “I agree with the manager – we don’t need to be picking a fight with anyone. … Too many people’s lives are at stake. This isn’t a time for games, or for people trying to line their pockets.”

Commissioner Dumont Clarke said it didn’t make sense for the county to continue to spend money on preparations and at the same time work with Cardinal.

“We’ve got to be really careful,” Clarke said. “We need to do what’s best for the consumer of the services. I’m a firm believer that you generally can’t chase two rabbits at the same time. When you try to, you generally don’t catch either one.”