An Annapolis-based chain of mental health clinics said it will have to close its doors by Oct. 1 because of ongoing problems and delays in getting paid for its treatment of Medicaid patients.
The Corner Clinic Inc., which operates five clinics in Anne Arundel, Caroline and St. Mary's counties, said yesterday that it is owed about $3 million in claims that have been either denied or held up because of paperwork errors.
The resulting cash-flow problems will force the company to lay off its 150 employees and stop treating about 2,000 patients with chronic mental health problems, company officials said.
The Corner Clinic's problems stem from a dispute with Maryland Health Partners, a unit of Columbia-based Magellan Behavioral Health, which is under contract with the state to process Medicaid claims. A spokeswoman for Maryland Health Partners referred questions about the billing dispute to state health officials.
Corner Clinic President James F. Crosson said Maryland Health has been too slow in processing its claims and often unjustifiably rejects claims.
"I think the system is broken," Crosson said. He plans to inform employees Friday of his plans to close the 7-year-old business unless state health officials agree to provide him with a grant to cover expenses while outstanding claims are processed.
State officials said they have been working with Corner Clinic for three years trying to resolve its billing problems, even going so far as to bring in a business consultant. But the company keeps making the same errors, resulting in delayed payments or rejected claims.
State officials said they are considering options to keep the clinics open, but providing a grant is not among the options being seriously discussed.
"In general, there are a limited number of providers who seem to be having problems billing, and certainly the Corner Clinic is one of those," said Tim Santoni, deputy director of the Maryland Department of Health and Mental Hygiene.
Complaints about delays in Medicaid payments soared in 1997 after the state moved to overhaul the way it finances mental health services. Gone were the days when mental health providers were guaranteed payment through grants approved by the General Assembly.
In its place was a new market-oriented fee-for-service system that requires providers to submit bills for services provided to patients on Medicaid.
The new system was an immediate disaster as Maryland Health Partners struggled to keep up with an unexpectedly high number of claims.
Unaccustomed to submitting bills for services, many mental health providers struggled with the new paperwork requirements, resulting in frequent errors. But state health officials and some health care providers say most of those problems have been resolved.
"They [Maryland Health Partners] have really gone the extra mile in that regard," said Bonnie Katz, a spokeswoman for the Sheppard Pratt Health System.
However, some providers and mental health advocates said the Corner Clinic isn't alone. Medicaid payments are often slow in coming, they said, causing cash-flow hassles for even large health care institutions equipped to deal with such problems.
"Providers have bent over backward to work with the state," said Jim McComb of the Maryland Association of Resources for Families and Youth. "And Maryland Health Partners' performance has been inconsistent for such a long period of time now that one wonders if they will ever get it right."
"We have had some difficulties with authorizations and slowness in payments [from Maryland Health Partners], though that's starting to resolve itself," said Mark Riddle, chairman of the Department of Child and Adolescent Psychology at Johns Hopkins. "We feel we were lucky that we were big enough to ride out this storm."
Corner Clinic began as a small clinic providing a full range of mental health services to mostly poor patients. Crosson said the business was successful until 1997, when Maryland Health Partners took over claims processing for the state.
But, he acknowledges, the clinic has made errors in its billing process. "I can say that 50 percent of the denied or [delayed] claims are our problem," he said. "But the other 50 percent are Maryland Health Partners' problem."
Frank Sullivan, executive director of the Anne Arundel County Mental Health Agency, said Corner Clinic never adjusted to the new payment system implemented in 1997 and is mostly to blame for its billing problems.
The agency is responsible for coordinating mental health services on the local level and has been working with Corner Clinic for several years to resolve billing issues.
"About 80 percent of the [Medicaid] claims seem to be going through statewide with no trouble," Sullivan said. "We're not sure why he seems to be making the same errors over and over again."
Sullivan said other mental health providers have enough capacity to handle patients who will be displaced if Corner Clinic closes its doors. However, one mental health advocate said it will be a difficult transition.
"Anytime a major provider shuts down, it creates havoc in all kinds of different ways that people don't really anticipate," said Heidi Bunes, executive director of the Maryland Psychiatric Society.