Jobs, programs are cut at two Colorado mental health centers amid Medicaid “unwind”

Update: This article was updated at 1 p.m. Oct. 2 to add news of layoffs at Jefferson Center.

Two more community mental health centers are eliminating jobs and cutting programs as Colorado’s safety-net health system staggers from a massive drop in Medicaid rolls.

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WellPower, which provides mental health care in Denver regardless of whether patients have insurance, is cutting six positions from its co-responder team that pairs social workers with city park rangers, fire and law officers. It’s also eliminating its virtual therapy program, which connected 579 patients with therapists online last year. And it’s ending its lease of Garfield House, an apartment complex where the mental health center has placed patients who needed housing.

Jefferson Center, which serves Jefferson, Clear Creek and Gilpin counties, announced Wednesday that it is laying off 25 employees, which is 3% of its staff.

“At a time when our communities need behavioral healthcare more than ever, when we are struggling in Colorado with some of the highest levels of suicide and overdose deaths, it is heartbreaking to reduce capacity and access to clinical care,” Jefferson Center’s CEO and president Kiara Kuenzler said as she announced the layoffs. “Staff reductions was a last-resort measure, after implementing all other options to balance our budget.”

Both centers, which are among 18 community mental health centers statewide, are attempting to close multi-million-dollar budget deficits, mainly caused by fewer patients with Medicaid government insurance.

Colorado had 1.8 million people enrolled in Medicaid during the pandemic, a historic 30% of the state’s population and up from 21% before COVID. Medicaid enrollment is now down to about 22% of the state’s population after the end of the three-year federal public health emergency put in place at the start of the pandemic.

Before what’s called the Medicaid “unwind,” about 6% of WellPower’s patients had no insurance. Now, that number is 19%. “Those folks still need care,” WellPower CEO Carl Clark said. “We do believe some folks lost Medicaid and they should not have. It has been a mess.”

Jefferson Center now has 6,000 clients with no insurance — 2,000 more than a year ago.

The 25 people losing their jobs are a mix of administrative and clinical professionals spread across various teams at Jefferson Center. The center is following its protocols for transitioning clients to new providers, including allowing clients to have a final session with their current therapist if needed.

Besides the decrease in Medicaid funding, the Denver mental health center has also lost local government investments and grants as funders are “pulling back and shifting their own spending in the wake of the changing behavioral health environment in Colorado,” Clark said.

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“While we knew this shift would result in changes to our billing practices, the size of the initial funding decrease from the state was far larger than we could have anticipated,” he said.

The city of Denver reduced WellPower’s contract for the co-responder program by $800,000, resulting in six case managers losing their jobs. The cuts did not affect outreach workers who go out on the streets to offer services to people who are homeless, but the loss of case managers will mean diminished follow-up care. The program is separate from the STAR program, which sends mental health workers out with paramedics on 911 calls.

WellPower also saw the end of a grant from the federal Substance Abuse and Mental Health Services Administration that was helping fund its online therapy program, TherapyDirect. Not enough people were using the program, despite multiple marketing campaigns, to justify raising new money to keep it going, Clark said.

Employees whose jobs are being eliminated are being offered other positions within the mental health center, which enacted a “hiring pause” about a year ago. The center now employs about 900 people compared with 1,000 last year.

Clients living in Garfield House will get to keep their housing vouchers, and staff will help them find places to move if needed, Clark said.

WellPower, which has about 21,000 clients, saw its $150 million annual budget drop to $144 million this year. “The big shift was the number of people who have no insurance,” Clark said. “For people who lost Medicaid that we are seeing, their needs didn’t go away.”

Layoffs, program cuts happening at several mental health centers

Larimer County’s community mental health center, SummitStone Health Partners in Fort Collins, abruptly laid off 75 employees in August, also blaming the decline in Medicaid enrollment and the state’s evolving behavioral health landscape. The center cut $14 million to break even on its $80 million budget.

Mind Springs, the safety-net mental health center for several counties in northwestern Colorado, laid off 49 people, 13% of its administrative staff, over the summer. Centennial Mental Health, which serves 10 counties in the northeastern corner of the state, laid off three of its five top executives in June. And Jefferson Center for Mental Health lost $7.5 million last year.

The deficit led Jefferson County and Denver mental health centers to call off plans for a merger, a move intended to streamline administrative costs.

“These have been very difficult times for community behavioral health,” said Kuenzler, with Jefferson Center.

Kuenzler called it a “crossroads for behavioral health” in which need is outpacing funding, despite “widespread recognition of how critical mental health and substance use treatment are to overall wellbeing of individuals, families and entire communities.”

“The capacity and resources that we have been able to expand over the past several years are now in jeopardy,” she said. “We are moving in the wrong direction.”

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The layoffs at Jefferson Center will save about $2.5 million, she said. Jefferson County and several of its cities, as well as hospitals and foundations, gave the mental health center an additional $2.75 million this year to prevent deeper cuts to staff and programs.

Shift in state policy affected payment stream

At the same time the number of patients insured by Medicaid dropped, the way Colorado funds behavioral health care is shifting.

The Behavioral Health Act, passed in 2022, took effect July 1. It was intended to break up the monopoly of Colorado’s mental health centers, opening them up to competition with private behavioral health agencies.

The centers have long operated under no-bid contracts with the Colorado Department of Health Care Policy and Financing, which includes Medicaid. The centers received $437 million in tax dollars per year and were required to treat people in their regions.

WellPower, for one, received $16 million from the state to provide an array of services for people in Denver. Clark said the services provided cost about $27 million, and WellPower was able to care for people without insurance because some of its divisions are profitable.

“The state has gotten a good deal,” Clark said. “Those services are going to start going away.”

Under the new structure, mental health centers don’t get a lump sum. They must bill the state Medicaid program for every service they provide, per person. This means some community mental health centers, which have provided not just therapy but housing consultation and case management, are struggling to recoup payment for those services.

Plus, the new per-service billing does not account for the number of people who now have no insurance.

“There was this theory that if you have more providers, more than just the mental health centers, that competition will improve quality of care and drive down costs,” Clark said. “I don’t think any mental health center has an issue with competition. What we have an issue with is that they didn’t put any more money in the system to pay for other providers.”

Kara Johnson-Hufford, CEO of the Colorado Behavioral Healthcare Council, the association for mental health centers, said centers have yet to see the Medicaid enrollment numbers stabilize and begin to trend back up. Meanwhile, they’re losing out on grants and local funding streams because the future of the behavioral health care business model is uncertain, she said. It makes it difficult for them to keep up the “heart and the mission” of their work, which is to “serve all that come through the door,” she said.

And it’s not just community mental health centers that are struggling financially after the Medicaid drop-off. Federally qualified health centers and rural health centers are feeling it, too, Johnson-Hufford said.

Without a huge effort from federal, state and local leaders, she said, Colorado will “run the risk of losing years of investment in these critical services for our communities.”

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