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State ends contract with West Michigan mental health care coordinator

Inside the doctor's office.
Jennifer Morrow

The Michigan Department of Health and Human Services announced it would end its contract with Lakeshore Regional Entity, a local group that's one of the state’s Prepaid Inpatient Health Plans (PIHPs) and coordinates mental and behavioral health care for low-income people and people with disabilities in West Michigan.

“Following many years of poor performance and financial mismanagement that stands out among PIHPs, we believe it is clear that LRE is not the right entity to deliver services for West Michigan residents in need,” MDHHS Director Robert Gordon said in a statement released on Friday. “The success of our public system depends on effective management. With a new approach, building on LRE’s recent work with Beacon, the region can achieve better outcomes for people while operating on a sustainable basis.”

“Beacon” refers to Beacon Health Options, a private, Boston-based firm. Lakeshore began contracting with Beacon in 2018 to help manage day-to-day management responsibilities. Beacon will temporarily take over Lakeshore’s contract, but MDHHS says it plans to establish a new Prepaid Inpatient Health Plan for the area.

PIHPs contract with the state and coordinate access to Medicaid services for mental and behavioral health care through community mental health authorities. This includes providing services to Medicaid enrollees and arranging inpatient hospital care.

Robert Sheehan is the CEO of the Community Mental Health Association of Michigan. He says contracting with Beacon undermines Michigan’s unique mental health care system.

“Lakeshore is still a publicly appointed, local governing body; it’s a county-based, publicly run system. Lakeshore contracts with Beacon now, so Beacon has been a great partner," he says. "The state’s proposal would go around Lakeshore, and would have a direct contract with Beacon. That is a violation of what Michigan has done for 50 years.”

He says Lakeshore has been underfunded by the state for years, and says that affects its ability to fully help its clients.

“In the absence of funding, when you have a budget gap of 16 million, the only thing you can do is reduce the intensity of services, reduce access to services for Medicaid enrollees, there's no other way out. That's how you balance a service delivery systems budget,” he says.

MDHHS says it recognizes “shortfalls” in funding, and has requested additional funding for PIHPs from the Legislature, but says even that additional funding will fix neither Lakeshore’s “funding shortfalls nor its management problems.”

Medicaid enrollees in west Michigan rely on Lakeshore for a variety of mental and behavioral health services. These include substance abuse treatment for alcoholism and opioid abuse, treatment for children with learning disabilities, services for adults and children with autism, adults with serious mental illnesses like schizophrenia and bipolar II, and services for the cognitively and mentally impaired. Lakeshore also provides 24/7 crisis services for those with and without Medicaid that reside in west Michigan.

Sheehan says the CMHA has proposed a three-way contract between the state, Beacon, and Lakeshore. 

“We said to the state, if you want to become more involved, please do so. In fact, we’ve been asking them to get more involved in Lakeshore’s issues for four years. We’re recommending they sign a three-way contract: the state would sign a contract, so would Lakeshore, so would Beacon, as opposed to just the state and Beacon,” he says. 

He says the state could then better address concerns “about the makeup of the Lakeshore board, and the role of the Lakeshore staff." He adds, "They don’t have to break the contract with Lakeshore to do any of those things. In fact, the momentum that Lakeshore and Beacon have made happen over the last year to close the financing gap has been pretty impressive.”

Lakeshore Regional Entity did not respond to requests for comment.


Caroline is a third year history major at the University of Michigan. She also works at The Michigan Daily, where she has been a copy editor and an opinion columnist. When she’s not at work, you can find her down at Argo Pond as a coxswain for the Michigan men’s rowing team. Caroline loves swimming, going for walks, being outdoors, cooking, trivia, and spending time with her two-year-old cat, Pepper.
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