Mecklenburg County officials may learn today whether the state will uphold its move to reassign the oversight of millions in federal Medicaid dollars to an outside organization – a decision that could lead to hundreds of county layoffs and $3 million in wasted money.

Two Mecklenburg commissioners told the Observer on Sunday that they don’t expect new Health and Human Services Secretary Aldona Wos to change her predecessors’ decision to redirect work from the county’s MeckLINK Behavioral Healthcare to Kannapolis-based Cardinal Innovations Healthcare Solutions.

Wos is Gov. Pat McCrory’s newly appointed secretary. She is set to hold a teleconference early today about the growing controversy with several Mecklenburg officials, including County Manager Harry Jones and board chair Pat Cotham.

At stake is management of $200 million in federal Medicaid money, $20 million in county money and $15.3 million in state money for mental health, substance abuse and developmental disability services. In 2011, more than 55,000 residents relied on the services.

Last week, Wos’ predecessor, acting Secretary Albert Delia, put the brakes on MeckLINK’s oversight. Delia concluded the agency couldn’t meet all the state’s requirements by a Feb. 1 deadline for a soft launch.

Instead, he reassigned the oversight to Cardinal, a managed care organization formerly known as Piedmont Behavioral Healthcare that oversees Medicaid programs for the poor in 15 N.C. counties.

If his ruling stands, Mecklenburg would lose about $3 million MeckLINK has spent to convert to a managed care organization. It would likely have to lay off more than 200 staffers hired to implement the programs.

The county would also lose millions in yearly administrative fees from Medicaid.

Gearing up for a fight

Mecklenburg, it appears, is gearing up for a fight.

Over the weekend, Jones told Mecklenburg commissioners that he hired Charlotte lawyer Dan Bishop, a former commissioner, to review the law governing the Medicaid waiver programs for any legal remedies.

Cotham said Sunday that the only remedy may be pursuing new legislation.

Late last week, state Rep. Justin Burr, an Albermarle Republican, told Cotham he felt Wos wouldn’t overturn Delia’s decision.

Other commissioners say the McCrory administration have told them the same thing.

Burr, co-chair of the House oversight committee on Health and Human Services, said there was little Mecklenburg could do except to get new legislation that would allow the county to continue implementing programs with a later deadline.

“He said he didn’t think that’d be too successful,” Cotham said Sunday. “He said we’ve been told and told and told that we weren’t meeting requirements – stuff that should have happened a year and a half ago. He said that this shouldn’t be a surprise to anyone.”

Ruling was a surprise

Delia’s announcement on Dec. 31 surprised many in Mecklenburg.

State law required that he determine by that date whether MeckLINK would be ready to “go live” by Feb. 1, a deadline that had already been extended.

The conversion of MeckLINK to a managed care organization is an effort by the state to create 11 quasi-governmental entities – many like Cardinal representing multiple counties – to oversee mental health, substance abuse and developmental disability services funded with Medicaid money.

The goal is to combine oversight of Medicaid and state money at the community level to reduce costs by keeping people out of institutions and to be more accountable and consistent with services.

Mecklenburg was the only county to decide to implement its own managed care organization. The other 99 counties will belong to 10 organizations like Cardinal.

By law, the official launch date is July 1. But the state wanted programs to start six months earlier to fix “hiccups” and make adjustments, said DHHS spokeswoman Julie Henry.

Delia based his decision on findings by a state-hired consultant, Mercer Government Human Services Consulting, which conducted readiness reviews of MeckLINK in August and November and the last one on Dec. 20.

During the August review, eight days after new MeckLINK head Phil Endress had started work, Mercer noted many deficiencies that included information technology and financial structure problems, contracts with providers that hadn’t been finalized, and hirings that were only half complete.

Since that time, Endress hired 131 staffers who were added to 73 full-time staffers already on board. He had planned to hire 30 to 50 more. They’ve installed a new computer system and tested it.

Endress was adamant last week that MeckLINK could “be up and running” by Feb. 1.

But on Dec. 20, a state official e-mailed Mercer asking: “Can Meck go live on Feb. 1?” She wrote she planned to meet with Delia the next day. “He wants a ‘yes’ or ‘no.’”

The answer from Mercer came back: “No.”

Yet the next day, Dec. 21, Mercer principal Laura Nelson e-mailed that MeckLINK could be ready by April 1. “Mercer thinks this would be a long enough delay (to July 1) to allow for testing by both MeckLINK and their providers, and to adequately implement the controls around data validation and report creation.”

‘A lot of questions’

Eleven days later, Delia sent County Manager Jones an e-mail saying he’d reassigned the Medicaid oversight to Cardinal.

It was Delia’s last day in office.

Last Wednesday, commissioners heard about it for the first time.

Many, like Cotham and Commissioner Bill James, said they were upset that the board was unaware until then. The lack of communication increased tensions between commissioners and top county officials that began with high-profile disasters over the 2011 revaluation and problems with the county’s social services agency.

Adding to the turmoil are concerns by mental health consumers and advocates that Cardinal is the subject of a class-action lawsuit alleging the agency (then called Piedmont Behavioral) didn’t properly alert about 700 residents that services were being cut.

Last March, Federal District Judge Louise Flanagan sided with plaintiffs and filed an injunction against Piedmont/Cardinal that allows residents to keep their Medicaid services. It doesn’t stop Piedmont/Cardinal from adopting the cost-cutting measures.

Cardinal is appealing Flanagan’s decision.

James said he’s perplexed by many issues. He said Mercer acknowledged MeckLINK could be operating by April 1 and it would take Cardinal 120 to 180 days to be operating in Mecklenburg.

“But they’re going with Cardinal despite disrupting peoples’ lives and wasting all that money from Mecklenburg,” he said. “They have a right to do it, but there is no benefit. MeckLINK can get things up and running faster than Cardinal.”

James said he was curious about how fast after Delia’s announcement that Cardinal issued a press release and posted job openings in Charlotte.

“It just raises questions about whether there are other things and motives at work here …” he said. “If the state thought MeckLINK just couldn’t do it, why didn’t pull the plug earlier before we hired all those people and spent all that money?

“This is so strange – it just creates a lot of questions.”