State: Mojave shouldn’t carry sole mental health contract

Tuesday, Sept. 11, 2001 | 10:07 a.m.

CARSON CITY -- A private mental health center in Las Vegas whose exclusive contract with the state has been questioned in the past will apparently be overpaid $601,000 this fiscal year, an audit says.

The state Division of Internal Audit concluded in a report released Monday that Mojave Mental Health Services should not have the only contract to treat the mentally ill and that the state should negotiate a lower payment rate with the company.

During the 2001 legislative session, critics called the exclusive contract a "sweetheart" deal because Mojave's medical director, Dr. Charles Mahakian, was a one-time boyfriend of Charlotte Crawford, director of the state Human Resources Department.

Crawford denied the allegation that there was favoritism and said the contract to Mojave was awarded in 1992 before she became director.

Both Mojave and the state Division of Mental Health and Developmental Disabilities provide outpatient services to the mentally ill in Southern Nevada.

A study showed the human resources department reimburses Mojave $92 an hour for therapy and medications and for helping with housing, paying bills and employment.

The audit said it only costs the state division $73 an hour to provide the same services.

Because there is no place in the state's mental health plan on how the rates should be set for Mojave, the audit stated: "Therefore the (human resources) department should amend the state Medicaid plan to allow negotiated rates with contractors."

Auditor John Medunic said the mental health division should look at contracting with other mental health firms. "Additional providers could reduce state costs and expand clients' choice of services," the report said.

The auditors surveyed other western states and found the statewide average cost was $72 an hour.

Mike Willden, newly named director of human resources, said he concurred with the recommendation to look for other firms to provide services. But he said the state needs to make sure the care is comparable.

Carlos Brandenburg, director of the state Division of Mental Health and Developmental Disabilities, told the audit committee that legislators called the contract with Mojave a "sweetheart deal." But he said the division has not received any complaints about the treatment provided.

The audit also recommended the division focus its attention on persons who cannot pay for outpatient mental health services. Last fiscal year, 43 percent of the outpatients served by the division had health coverage.

"When the department accepts insured clients, it is competing with private providers," the audit stated. "Additionally, the state may save money by contracting out services for Medicaid covered clients."

If mental health reduces its reliance on clients with health care coverage, it could reduce expenditures or service clients on waiting lists, the audit said.

But Brandenburg said the division's budget is based on receiving money from insurance companies and Medicaid. Without that money, he said, the state would have to pay more.