Sonoma County health department’s tardy contracts continue to hinder providers

In late May, a Sonoma County Department of Health Services employee sent a letter to each member of the county’s Board of Supervisors. Among other charges leveled against DHS, the letter raised an issue that had not been publicly addressed before.

“Ms. Rivera has managed to build a 45 million dollar deficit in billing Medi-Cal/Medicare for DHS services,” wrote the staff member, who requested anonymity in a subsequent interview with The Press Democrat, citing fear of retribution by his employer.

“Community partners/contractors have not been paid (causing several to go out of business due to the financial hardship), and contracts and grants have not been executed or followed up on (causing great harm to the community by DHS’s inability to provide services).”

A half-dozen people affiliated with local nonprofits talked to The Press Democrat about the chronic DHS backlog in processing Medi-Cal expenses — fees subsidized by California’s public health insurance program and owed to behavioral health providers in the county. Most insisted on anonymity for fear of alienating public funding sources that allow them to operate.

Another half-dozen declined interviews on the subject.

Those who spoke described a cumbersome and unforgiving state bureaucracy, public spending gaps and staffing shortages that couldn’t be blamed on any one person. Most agreed the snags in Sonoma County long preceded Rivera.

But pretty much everyone who spoke to The Press Democrat for this story agreed on one vexing problem. The Sonoma County Department of Health Services has a history of failing to execute timely contracts for its behavioral health providers, often leading to a grim financial situation for health-focused nonprofits, and for the vulnerable populations they serve.

“You hate to have to ask, do we not feed this senior, or do we not provide housing services to this needy family?” said Elece Hempel, executive director of Petaluma People Services Center, which oversees dozens of human services programs. “Yes, we’ll get reimbursed for that. But when? And how? Unlike a for-profit business, I can’t just go out and make more widgets.

“My widgets are my guaranteed contracts I have with county or state government. Even if they’re just slow to pay, it creates a hardship.”

Petaluma People Services Center does not currently have any contracts with Sonoma County DHS, but it has in the past.

The consistent lags in processing contracts for behavioral health providers are not in dispute. Nor are the ramifications, which include budget imbalances that require the organizations to borrow from lenders, devote time to raising money or trim services. In fact, Rivera opened up about those things in an October interview with The Press Democrat, vowing to get the process on track.

“I’ve certainly had some difficult conversations with providers,” she said. “But necessary conversations. I don’t take it personally, because I know I’m not the source of what’s going on. But I know I can correct what’s been happening here, historically.”

When the board of supervisors removed Rivera’s “interim” tag and officially named her DHS director last February, they asked her to create an 18-month plan. She immediately identified partner contracts as a top priority.

“What’s the problem?” Rivera recalled thinking. “Is it staffing? Where are the bottlenecks? I didn’t have time do a deep analysis of when did this start. My concern was, OK, how can we stop this? What resources can I bring to bear to correct it?”

Sonoma County DHS does not offer hands-on health services to its residents. Instead, it relies on a network of providers. Those that provide medical diagnosis and treatment, such as hospitals, private doctors and Federally Qualified Health Centers, bill the state directly for Medi-Cal services rendered.

The situation is trickier for a smaller subset of community-based organizations that offer behavioral health services — a broad category that includes mental health counseling, addiction treatment and homeless services.

Those providers receive money from the county, and are essentially subcontractors. They offer free or reduced-fee services to Medi-Cal patients, and submit payment requests to DHS. The department pays its contracted providers, and in turn files reimbursement requests with the California Department of Health Services.

The state requires strict adherence. After a 2020-21 compliance review, the Department of Health Services initiated a “corrective action plan” for Sonoma County, citing the absence of a process to review and verify the accuracy of submitted Medi-Cal claims, and a failure to document annual audits of providers.

There are deadlines, too. Six months after any service is provided, the state begins to penalize the entity submitting the claim and pays out at less than 100%.

Rivera insisted DHS’s local health partners have not been adversely affected by any backlogs in submitting claims, and she disputed the whistleblowers’ assertion that these delays resulted in lost money for the county.

“Zero penalties,” she said when asked.

But the contract issue, Rivera acknowledged, is real. At some point — the breakdown preceded not only Rivera, but also her predecessor, Barbie Robinson, sources say — the county fell behind in getting signed contracts to its behavioral health partners by July 1, the start of each fiscal year.

This has created an annual cycle of hardship. Unwilling to simply stop offering assistance to the clients who desperately need it, the providers usually just operate without a contract for a few months. That means money going out for rental space, staff hours and supplies, with little coming back in. And until they have a signed contract, organizations aren’t even sure of the rate they’ll be paid for services.

“Most nonprofits run in the red,” said Hempel, the Petaluma People Services Center director. “So what we end up doing is, either we have to fundraise or we cut services in another program. Because whatever dollars we earn, we have to specifically parse them out to serve the needs of the community.”

Her organization has never had to rely on a line of credit to cover a late contract, but many do, Hempel added. And while fundraising comes with the territory, it can be exhausting to keep up with temporary shortfalls.

“Ultimately, our donors become our bank,” Hempel said. “And we have a generous community. But honestly, if you take the number of people living in Petaluma, it comes out to $35 per person in Petaluma to fund what we do. Of 60,000 people living here, we have to get $35 from each one.”

Though Rivera has spent most of her career in the public sector, she did have a stint as executive director at Compassion Center, a nonprofit organization in Shreveport, Louisiana. So she understands the challenges created by her department’s long record of tardiness, she said.

The biggest impediment to getting contracts out to nonprofits in time, according to Rivera, has been budget-driven staffing shortages. And the situation only got worse during the COVID-19 pandemic, Rivera said, as workers took on new responsibilities and were forced to deal with their own health concerns and, in many cases, child care issues.

“COVID really daylighted how under-resourced the health care system has been throughout this nation,” she said. “And it exacerbated the mental health crisis. Now we’re seeing the exacerbation of a staffing crisis.”

DHS responded by bringing in temporary help, Rivera said. And last May, she attempted to address the gap by directing some employees back to full-time, in-person work. That order led to immediate pushback from staff who claimed their work environment at DHS wasn’t safe.

Public health staffing problems are not unique to this area.

“I’d love to say Sonoma is the only county where it’s an issue, but it’s not,” said Karen Larsen, CEO of the Steinberg Institute, a nonprofit organization that advocates for stronger public policy around mental health and substance use. “Workforce is an issue everywhere. I wouldn’t guess it’s a majority of California counties, but it’s more than a handful where this is an issue.”

Still, Rivera believes she can build her accounting staff to where it needs to be and straighten out the ongoing contract mess. Funding is starting to arrive from both the state and federal governments for mental health and substance disorder services. And, Rivera added, “If I need extra temporary help, I’ll ask for it.”

It will take some work. In October, Rivera said 28 direct-service behavioral providers were waiting to execute their 2022-23 county contracts — more than three months after 2021-22 contracts expired.

At that time, the health director said the goal was to complete the remaining 28 contracts by the end of December.

On Wednesday, Rivera offered an update: Only five of the 28 were still incomplete, she said, and she expected four of those contracts to be executed by the end of the week.

“One provider is out of compliance due to privacy audits and we do not anticipate this contract to be completed by our target date,” Rivera said in an email. “We are hopeful that as we continue to work diligently with this provider we will resolve their compliance issues by mid-February.”

She said DHS is expecting to negotiate 2023-24 contracts with behavioral health partners “by the end of January to early February,” which would put the process on schedule.

“This has been a heavy lift,” Rivera wrote. “I am thankful for the patience of our wonderful providers who partner with us in providing quality services to our community. I am also very grateful to our tireless staff who have worked long hours to help correct these historical issues that have plagued this contracting process for far too long.”

Local organizations are hopeful they’ll see improvement.

“It’s refreshing that Tina took that call from you and said there are things that need to get fixed,” Hempel said. “There have been a lot of mistakes in the past, but how do we look forward? How do we not allow someone to fall through the cracks when they are struggling with mental health?”

You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On Twitter @Skinny_Post.