Union of Cedar Rapids and Iowa City agencies expected to save money before state switch to managed care

Two of Eastern Iowa's largest mental health agencies plan to merge to save money in preparation for the state's switch to managed care.

The board for the Community Mental Health Center for Mid-Eastern Iowa, commonly known as Iowa City Community Mental Health Center, voted last night to join the Abbe Center for Community Mental Health in Cedar Rapids.

'With the merger, we'll be in a better position to deliver mental health services within the financial constraints anticipated with the impending Medicaid managed care changes,” Stephen Trefz, executive director of the Iowa City-based mental health center, said in a prepared statement.

The Iowa Department of Human Services is seeking proposals from private companies interested in administering parts of Iowa's $4.2 billion Medicaid program, which provides assistance to about 560,000 young, poor, disabled and elderly Iowans. The move to managed care is expected to save $52 million in the first six months.

Thirty-nine states and Washington, D.C., use managed care, DHS reported. Critics have called for the process to slow down so they can research the possible downsides.

The union of the Abbe and Iowa City community mental health centers will create an agency with more than 200 employees that will serve more than 12,000 children and adults in nine counties. Administrators say there are no plans for layoffs, and the new organization will maintain offices in Iowa City, Cedar Rapids and 'surrounding areas.”

The non-profits expect to save money by not duplicating costs for data collection, financial reporting and information technology. There is no financial transaction connected to the proposed merger.

Leaders of the agencies make clear in the news release they are wary of managed care.

'Mental health organizations anticipate that Medicaid managed care will add significantly to their administrative costs and strain their infrastructure capacity,” the news release states. 'Increased data collection and outcome measurement requirements are expected to impact all health care organizations, including mental health providers.”

The Abbe Center will vote on the merger in mid-May, and the Abbe Inc. board will vote in June. The deal is expected to close July 1.