Confused about the changes coming to publicly funded treatment in Michigan? Here’s the background.

historyI’ve gotten several questions about yesterday’s post on looming changes for publicly funded treatment in Michigan. These questions made me realize I probably needed to provide a little background. To be honest, I haven’t followed it that closely and it’s all a little confusing.


Michigan is one of a shrinking number of states that “carves out” its behavior health funding. Meaning that Medicaid HMOs are not responsible for behavioral health services. (Behavioral health services refers to services for mental illness, developmental disabilities and substance use disorders.)

Instead, the state keeps about $2.4 billion dollars and distributes it to 10 regional organizations called PIHPs (Prepaid Inpatient Health Plans) that are responsible for behavioral health services in their region. The PIHPs do not deliver the services themselves, but they contract for these services and oversee them.

In February of 2016, Governor Snyder proposed that, by Sept. 2017, all behavioral health clients and money be transferred to the state Medicaid HMOs. (This is referred to as Section 298, referring to the relevant portion of the budget proposal.)

There had been no groundwork or forewarning leading up to the proposal and it caught people by surprise.

There has been a national trend away from carve-outs. There may be many reasons for this trend but the two reasons I hear are preferences for privatization and a desire to increase integration of behavioral health with physical health systems. It can also be argued that there are ways in which it seems sensible and destigmatizing to have Medicaid recipients receive services just like everyone else—through their insurer.

On the other hand, the people served by the public system often represent the most severe and complex cases. In response to this severity and complexity, public systems has developed systems of care that include things like peer support, supportive housing, employment support, and mental health club houses. They also work with local communities and first responders on things like overdose rescue, and problem solving courts. It’s hard to imagine HMOs doing this kind of work.

Providers, service recipients, families and mental health advocates organized to oppose the change. They expressed concern that this would result in cuts in services and that there would not be any financial savings for the state.

In April 2016 the outcry about the proposal resulted in the legislature creating a workgroup that is responsible for reviewing the issue and issuing a report with recommendations by February 2017. This workgroup is called the Section 298 Workgroup.

So, to this point, nothing has changed.

This brings us to yesterday’s post which was about an interim report that was released by the workgroup on Friday.

If I’m reading the report correctly, it looks like they recommend keeping the carve out and trying some pilots programs.

So, privatization looks less likely than it did a year ago, but anything could happen.

A lot depends on what the final report from the workgroup looks like and how deferent the legislature will be to the workgroup.

The new Michigan legislature is even more conservative than the last and it’s easy to imagine them deciding they want to privatize regardless of the final report’s recommendations.



Here is the statement the workgroup issued on Friday:

The Michigan Department of Health and Human Services (MDHHS) today submitted the interim report for the Section 298 Initiative to the Michigan legislature. The Section 298 Initiative is a statewide effort to improve the coordination of physical health services and behavioral health services. The interim report reflects the discussions of the 298 Facilitation Workgroup. The interim report contains a series of policy recommendations for the Michigan Legislature on improving the coordination of physical health and behavioral health services.

The MDHHS and the 298 Facilitation Workgroup also launched the next phase on the Section 298 Initiative today. The next phase of the initiative focuses on the development of recommendations on models and benchmarks for implementation.

As part of the next phase of the initiative, interested stakeholders can submit potential models for consideration by the 298 Facilitation Workgroup. MDHHS will accept model proposals submitted to using a standardized template from January 13, 2017 to February 3, 2017 at 5:00 p.m. The model proposal template can be found on the MDHHS webpage at

The model proposal process is not a request for proposal which will result in a direct contract or other formal engagement of the submitter(s): this process is a request for information which will contribute to the development of the Section 298 Final Report for the Michigan legislature.

For more information about the interim report and the model proposal process, visit or send an email to

If you have opinions on the matter, please contact the workgroup and your legislators. (There’s still plenty of time. This has not been a fast moving process.)

2 thoughts on “Confused about the changes coming to publicly funded treatment in Michigan? Here’s the background.

  1. Methadone has changed my brother back into a productive member of society. He works everyday. He’s not running for the next drug. I have my brother back after years of absence. I can carryon conversations like when we were young. The expense is the only problem I have. The control over the drug I agree with. Having them go n get it daily until certain levels are reached.


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