GENERAL ASSEMBLY OF NORTH CAROLINA

 SESSION 2011

H                                                                                                                                                   3

HOUSE BILL 1075*

Committee Substitute Favorable 6/5/12

Senate Mental Health & Youth Services Committee Substitute Adopted 6/11/12

Short Title:        LME/MCO Governance.	(Public)
Sponsors:
Referred to:

May 24, 2012

A BILL TO BE ENTITLED

AN ACT to make changes in governance of Local management entities with respect to the implementation of statewide expansion of the 1915(b)/(c) medicaid waiver.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 122C-115(a) reads as rewritten:

"§ 122C-115.  Duties of counties; appropriation and allocation of funds by counties and cities.

(a)        A county shall provide mental health, developmental disabilities, and substance abuse services in accordance with rules, policies, and guidelines adopted pursuant to statewide restructuring of the management responsibilities for the delivery of services for individuals with mental illness, intellectual or other developmental disabilities, and substance abuse disorders under a 1915(b)/(c) Medicaid Waiver through an area authority or authority, through a county program established pursuant to G.S. 122C-115.1.G.S. 122C-115.1, or through a behavioral health authority established pursuant to Part 2B of this Chapter. Beginning July 1, 2012, the catchment area of an area authority or a county program shall contain a minimum population of at least 300,000. Beginning July 1, 2013, the catchment area of an area authority or a county program shall contain a minimum population of at least 500,000. To the extent this section conflicts with G.S. 153A-77(a), the provisions of G.S. 153A-77(a) control."

SECTION 2.(a)  G.S. 122C-116 reads as rewritten:

"§ 122C-116.  Status of area authority; status of consolidated human services agency.

(a)        An area authority is a local political subdivision of the State except that a single county area authority is considered a department of the county in which it is located for the purposes of Chapter 159 of the General Statutes.State.

(b)        A consolidated human services agency is a department of the county."

SECTION 2.(b)  G.S. 122C-115.1(i) reads as rewritten:

"(i)        Except as otherwise specifically provided, this Chapter applies to counties that provide mental health, developmental disabilities, and substance abuse services through a county program. As used in the applicable sections of this Article, the terms "area authority", "area program", and "area facility" shall be construed to include "county program". The following sections of this Article do not apply to county programs:

(1) G.S. 122C-115.3, 122C-116, 122C-117, and 122C-118.1.

(2) G.S. 122C-119 and G.S. 122C-119.1.

(3) G.S. 122C-120 and G.S. 122C-121.

(4) G.S. 122C-127.

(5) G.S. 122C-147.

(6) G.S. 122C-152 and G.S. 122C-153.

(7) G.S. 122C-156.

(8) G.S. 122C-158."

SECTION 3.(a)  G.S. 122C-118.1 reads as rewritten:

"§ 122C-118.1.  Structure of area board.

(a)        An area board shall have no fewer than 11 and no more than 25 members. However, the area board for a multicounty area authority consisting of eight or more counties may have up to 30 members. In a single-county area authority, the members shall be appointed by the board of county commissioners. Except as otherwise provided, in areas consisting of more than one county, each board of county commissioners within the area shall appoint one commissioner as a member of the area board. These members shall appoint the other members. The boards of county commissioners within the multicounty area shall have the option to appoint the members of the area board in a manner other than as required under this section by adopting a resolution to that effect. The boards of county commissioners in a multicounty area authority shall indicate in the business plan each board's method of appointment of the area board members in accordance with G.S. 122C-115.2(b). These appointments shall take into account sufficient citizen participation, representation of the disability groups, and equitable representation of participating counties. Individuals appointed to the board shall include two individuals with financial expertise, an individual with expertise in management or business, and an individual representing the interests of children. A member of the board may be removed with or without cause by the initial appointing authority. Vacancies on the board shall be filled by the initial appointing authority before the end of the term of the vacated seat or within 90 days of the vacancy, whichever occurs first, and the appointments shall be for the remainder of the unexpired term. An area board shall have no fewer than 11 and no more than 21 voting members. The board of county commissioners, or the boards of county commissioners within the area, shall appoint members consistent with the requirements provided in subsection (b) of this section. The process for appointing members shall ensure participation from each of the constituent counties of a multicounty area authority. If the board or boards fail to comply with the requirements of subsection (b) of this section, the Secretary shall appoint the unrepresented category. A member of the board may be removed with or without cause by the initial appointing authority. The area board may declare vacant the office of an appointed member who does not attend three consecutive scheduled meetings without justifiable excuse. The chair of the area board shall notify the appropriate appointing authority of any vacancy. Vacancies on the board shall be filled by the initial appointing authority before the end of the term of the vacated seat or within 90 days of the vacancy, whichever occurs first, and the appointments shall be for the remainder of the unexpired term.

(b)        Except as otherwiseWithin the maximum membership provided in this subsection, not more than fifty percent (50%) ofsubsection (a) of this section, the membersmembership of the area board shall reside within the catchment area and represent the following:be composed as follows:

(1)        A physician licensed under Chapter 90 of the General Statutes to practice medicine in North Carolina who, when possible, is certified as having completed a residency in psychiatry.At least one member who is a current county commissioner.

(2)        A clinical professional from the fields of mental health, developmental disabilities, or substance abuse.The chair of the local Consumer and Family Advisory Committee (CFAC) or the chair's designee.

(3)        At least one family member or individual from a citizens' organization composed primarily of consumers or their family members,of the local CFAC, as recommended by the local CFAC, representing the interests of individuals:the following:

a.         WithIndividuals with mental illness;illness.

b.         InIndividuals in recovery from addiction; oraddiction.

c.         With Individuals with intellectual or other developmental disabilities.

(4)        At least one openly declared consumer member of the local CFAC, as recommended by the local CFAC, representing the interests of the following:

a.         WithIndividuals with mental illness;illness.

b.         WithIndividuals with intellectual or other developmental disabilities; ordisabilities.

c.         In Individuals in recovery from addiction.

(5) An individual with health care expertise and experience in the fields of mental health, intellectual or other developmental disabilities, or substance abuse services.

(6) An individual with health care administration expertise consistent with the scale and nature of the managed care organization.

(7) An individual with financial expertise consistent with the scale and nature of the managed care organization.

(8) An individual with insurance expertise consistent with the scale and nature of the managed care organization.

(9) An individual with social services expertise and experience in the fields of mental health, intellectual or other developmental disabilities, or substance abuse services.

(10) An attorney with health care expertise.

(11) A member who represents the general public and who is not employed by or affiliated with the Department of Health and Human Services, as appointed by the Secretary.

(12) The President of the LME/MCO Provider Council or the President's designee to serve as a nonvoting member who shall participate only in Board activities that are open to the public.

(13) An administrator of a hospital providing mental health, developmental disabilities, and substance abuse emergency services to serve as a nonvoting member who shall participate only in Board activities that are open to the public.

AnExcept as provided in subdivision (12) of this subsection, an individual that contracts with a local management entity (LME) for the delivery of mental health, developmental disabilities, and substance abuse services may not serve on the board of the LME for the period during which the contract for services is in effect. No person registered as a lobbyist under Chapter 120C of the General Statutes shall be appointed to or serve on an area authority board. Of the members described in subdivisions (2) through (4) of this subsection, the boards of county commissioners shall ensure there is at least one member representing the interest of each of the following: (i) individuals with mental illness, (ii) individuals with intellectual or other developmental disabilities, and (iii) individuals in recovery from addiction.

(c)        The board of county commissioners may elect to appoint a member of the area authority board to fill concurrently no more than two categories of membership if the member has the qualifications or attributes of the two categories of membership.

(d)        Any member of an area board who is a county commissioner serves on the board in an ex officio capacity at the pleasure of the initial appointing authority, for a term not to exceed the earlier of three years or the member's service as a county commissioner. Any member of an area board who is a county manager serves on the board at the pleasure of the initial appointing authority, for a term not to exceed the earlier of three years or the duration of the member's employment as a county manager. The terms of the othermembers on the area board shall be for three years, except that upon the initial formation of an area board in compliance with subsection (a) of this section, one-third shall be appointed for one year, one-third for two years, and all remaining members for three years. Members, other than county commissioners and county managers, Members shall not be appointed for more than twothree consecutive terms. Board members serving as of July 1, 2006, may remain on the board for one additional term. This subsection applies to all area authority board members regardless of the procedure used to appoint members under subsection (a) of this section.

(e)        Upon request, the board shall provide information pertaining to the membership of the board that is a public record under Chapter 132 of the General Statutes."

SECTION 3.(b)  All area boards shall meet the requirements of G.S. 122C-118.1, as amended by subsection (a) of this section, no later than July 1, 2013.

SECTION 4.(a)  G.S. 122C-119.1 reads as rewritten:

"§ 122C-119.1.  Area Authority board members' training.

All members of the governing body for an area authority shall receive initial orientation on board members' responsibilities and annual training provided by the Department inwhich shall include fiscal management, budget development, and fiscal accountability. A member's refusal to be trained shall be grounds for removal from the board."

SECTION 4.(b)  The North Carolina Department of Health and Human Services, in cooperation with the School of Government and the local management entities, shall develop a standardized core curriculum for the training described in subsection (a) of this section.

SECTION 5.  G.S. 122C-170(b) reads as rewritten:

"Part 4A. Consumer and Family Advisory Committees.

"§ 122C-170.  Local Consumer and Family Advisory Committees.

…

(b)        Each of the disability groups shall be equally represented on the CFAC, and the CFAC shall reflect as closely as possible the racial and ethnic composition of the catchment area. The terms of members shall be three years, and no member may serve more than twothree consecutive terms. The CFAC shall be composed exclusively of:

(1)        Adult consumers of mental health, developmental disabilities, and substance abuse services.

(2)        Family members of consumers of mental health, developmental disabilities, and substance abuse services.

…."

SECTION 6.  Area authorities may add one or more additional counties to their existing catchment area by agreement of a majority of the existing member counties.

SECTION 7.(a)  Beginning July 1, 2012, and for a period of two years thereafter, the Department of Health and Human Services shall not approve any county's request to withdraw from a multicounty area authority operating under the 1915(b)/(c) Medicaid Waiver. Not later than January 1, 2014, the Secretary shall adopt rules to establish a process for county disengagement that shall at a minimum ensure the following:

(1)        Provisions of service are not disrupted by the disengagement.

(2)        The disengaging county is either in compliance or plans to merge with an area authority that is in compliance with population requirements provided in G.S. 122C-155(a).

(3)        The timing of the disengagement is accounted for and does not conflict with setting capitation rates.

(4)        Adequate notice is provided to the affected counties, the Department of Health and Human Services, and the General Assembly.

(5)        Provisions for distribution of any real property no longer within the catchment area of the area authority.

SECTION 7.(b)  G.S. 122C-112.1 is amended by adding a new subdivision to read:

"(38) Adopt rules establishing a procedure for single-county disengagement from an area authority operating under a 1915(b)/(c) Medicaid Waiver."

SECTION 8.  G.S. 122C-147(c) reads as rewritten:

"§ 122C-147.  Financing and title of area authority property.

…

(c)        All real property purchased for use by the area authority shall be provided by local or federal funds unless otherwise allowed under subsection (b) of this section or by specific capital funds appropriated by the General Assembly. The title to this real property and the authority to acquire it is held by the county where the property is located. The authority to hold title to real property and the authority to acquire it, including the area authority's authority to finance its acquisition by an installment contract under G.S. 160A-20, may be held by the area authority or by the contracting governmental entity with the approval of the board or boards of commissioners of all the counties that comprise the area authority. The approval of a board of county commissioners shall be by resolution of the board and may have any necessary or proper conditions, including provisions for distribution of the proceeds in the event of disposition of the property by the area authority. area authority. Real property may not be acquired by means of an installment contract under G.S. 160A-20 unless the Local Government Commission has approved the acquisition. No deficiency judgment may be rendered against any unit of local government in any action for breach of a contractual obligation authorized by this subsection, and the taxing power of a unit of local government is not and may not be pledged directly or indirectly to secure any moneys due under a contract authorized by this subsection.

…."

SECTION 9.(a)  G.S. 122C-117 reads as rewritten:

"§ 122C-117.  Powers and duties of the area authority.

(a)        The area authority shall do all of the following:

…

(7)        Appoint an area director in accordance with G.S. 122C-121(d). The appointment is subject to the approval of the board of county commissioners except that one or more boards of county commissioners may waive its authority to approve the appointment. The appointment shall be based on a selection by a search committee of the area authority board. The search committee shall include consumer board members, a county manager, and one or more county commissioners. The Secretary shall have the option to appoint one member to the search committee.

…

(17) Have the authority to borrow money with the approval of the Local Government Commission.

…

(c)        Within 30 days of the end of each quarter of the fiscal year, the area director and finance officer of the area authority shall provide the quarterly report of the area authority to the county finance officer. The county finance officer shall provide the quarterly report to the board of county commissioners at the next regularly scheduled meeting of the board. The clerk of the board of commissioners shall notify the area director and the county finance officer if the quarterly report required by this subsection has not been submitted within the required period of time. This information shall be presented in a format prescribed by the county. At least twice a year, this information shall be presented in person and shall be read into the minutes of the meeting at which it is presented. In addition, the area director or finance officer of the area authority shall provide to the board of county commissioners ad hoc reports as requested by the board of county commissioners.delivered to the county and, at the request of the board of county commissioners, may be presented in person by the area director or the director's designee.

…."

SECTION 9.(b)  G.S. 122C-115.2 is amended by adding a new subsection to read:

"(e) The Secretary may waive any requirements of this section that are inconsistent with or incompatible with contracts entered into between the Department and the area authority for the management responsibilities for the delivery of services for individuals with mental illness, intellectual or other developmental disabilities, and substance abuse disorders under a 1915(b)/(c) Medicaid Waiver."

SECTION 10.  Part 2 of Article 4 of Chapter 122C of the General Statutes is amended by adding a new section to read:

"§ 122C-126.1.  Confidentiality of competitive health care information.

(a) For the purposes of this section, competitive health care information means information relating to competitive health care activities by or on behalf of the area authority. Competitive health care information shall be confidential and not a public record under Chapter 132 of the General Statutes; provided that any contract entered into by or on behalf of an area authority shall be a public record, unless otherwise exempted by law, or the contract contains competitive health care information, the determination of which shall be as provided in subsection (b) of this section.

(b) If an area authority is requested to disclose any contract that the area authority believes in good faith contains or constitutes competitive health care information, the area authority may either redact the portions of the contract believed to constitute competitive health care information prior to disclosure or, if the entire contract constitutes competitive health care information, refuse disclosure of the contract. The person requesting disclosure of the contract may institute an action pursuant to G.S. 132-9 to compel disclosure of the contract or any redacted portion thereof. In any action brought under this subsection, the issue for decision by the court shall be whether the contract, or portions of the contract withheld, constitutes competitive health care information, and in making its determination, the court shall be guided by the procedures and standards applicable to protective orders requested under Rule 26(c)(7) of the Rules of Civil Procedure. Before rendering a decision, the court shall review the contract in camera and hear arguments from the parties. If the court finds that the contract constitutes or contains competitive health care information, the court may either deny disclosure or may make such other appropriate orders as are permitted under Rule 26(c) of the Rules of Civil Procedure.

(c) Nothing in this section shall be deemed to prevent the Attorney General, the State Auditor, or an elected public body, in closed session, which has responsibility for the area authority, from having access to this confidential information. The disclosure to any public entity does not affect the confidentiality of the information. Members of the public entity shall have a duty not to further disclose the confidential information."

SECTION 11.(a)  G.S. 126-5(a) reads as rewritten:

"§ 126-5.  Employees subject to Chapter; exemptions.

(a)        The provisions of this Chapter shall apply to:

(1)        All State employees not herein exempt; and

(2)        All employees of the following local entities:

a.         Area mental health, developmental disabilities, and substance abuse authorities.authorities, except as otherwise provided in Chapter 122C of the General Statutes.

b.         Local social services departments.

c.         County health departments and district health departments.

d.         Local emergency management agencies that receive federal grant-in-aid funds.

An employee of a consolidated county human services agency created pursuant to G.S. 153A-77(b) is not considered an employee of an entity listed in this subdivision.

(3)        County employees not included under subdivision (2) of this subsection as the several boards of county commissioners may from time to time determine."

SECTION 11.(b)  G.S. 122C-154 reads as rewritten:

"§ 122C-154.  Personnel.

Employees under the direct supervision of the area director are employees of the area authority. For the purpose of personnel administration, Chapter 126 of the General Statutes applies unless otherwise provided in this Article. Employees appointed by the county program director are employees of the county. In a multicounty program, employment of county program staff shall be as agreed upon in the interlocal agreement adopted pursuant to G.S. 122C-115.1. Notwithstanding G.S. 126-9(b), an employee of an area authority may be paid a salary that is in excess of the salary ranges established by the State Personnel Commission. Any salary that is higher than the maximum of the applicable salary range shall be supported by documentation of comparable salaries in comparable operations within the region and shall also include the specific amount the board proposes to pay the employee. The area board shall not authorize any salary adjustment that is above the normal allowable salary range without obtaining prior approval from the Director of the Office of State Personnel."

SECTION 11.(c)  G.S. 122C-121(a1) reads as rewritten:

"(a1)     The area board shall establish the area director's salary under Article 3 of Chapter 126 of the General Statutes. An area board may request an adjustment to the salary ranges under G.S. 126-9(b). The request shall include specific information supporting the need for the adjustment, including comparative salary and patient caseload data for other LMEs, and shall also include the specific amount the area board proposes to pay the director. The area board shall not request a salary adjustment that is more than ten percent (10%) above the normal allowable salary range as determined by the State Personnel Commission.Notwithstanding G.S. 126-9(b), an area director may be paid a salary that is in excess of the salary ranges established by the State Personnel Commission. Any salary that is higher than the maximum of the applicable salary range shall be supported by documentation of comparable salaries in comparable operations within the region and shall also include the specific amount the board proposes to pay the director. The area board shall not authorize any salary adjustment that is above the normal allowable salary range without obtaining prior approval from the Director of the Office of State Personnel."

SECTION 12.(a)  G.S. 122C-122 is repealed.

SECTION 12.(b)  G.S. 35A-1202(4) reads as rewritten:

"§ 35A-1202.  Definitions.

When used in the Subchapter, unless a contrary intent is indicated or the context requires otherwise:

…

(4)        "Disinterested public agent" means:means

a. Thethe director or assistant directors of a local human services agency, orcounty department of social services.

b. An adult officer, agent, or employee of a State human services agency. TheExcept as provided in G.S. 35A-1213(f), the fact that a disinterested public agent is employed by a State or local human services agency that provides financial assistance, services, or treatment to a ward does not disqualify that person from being appointed as guardian.

.…"

SECTION 12.(c)  G.S. 35A-1213 reads as rewritten:

"§ 35A-1213.  Qualifications of guardians.

(a)        The clerk may appoint as guardian an adult individual, a corporation, or a disinterested public agent. The applicant may submit to the clerk the name or names of potential guardians, and the clerk may consider the recommendations of the next of kin or other persons.

(b)        A nonresident of the State of North Carolina, to be appointed as general guardian, guardian of the person, or guardian of the estate of a North Carolina resident, must indicate in writing his willingness to submit to the jurisdiction of the North Carolina courts in matters relating to the guardianship and must appoint a resident agent to accept service of process for the guardian in all actions or proceedings with respect to the guardianship. Such appointment must be approved by and filed with the clerk, and any agent so appointed must notify the clerk of any change in the agent's address or legal residence. The clerk shall require a nonresident guardian of the estate or a nonresident general guardian to post a bond or other security for the faithful performance of the guardian's duties. The clerk may require a nonresident guardian of the person to post a bond or other security for the faithful performance of the guardian's duties.

(c)        A corporation may be appointed as guardian only if it is authorized by its charter to serve as a guardian or in similar fiduciary capacities. A corporation shall meet the requirements outlined in Chapters 55 and 55D of the General Statutes. A corporation will provide a written copy of its charter to the clerk of superior court. A corporation contracting with a public agency to serve as guardian is required to attend guardianship training and provide verification of attendance to the contracting agency.

(d)        A disinterested public agent who is appointed by the clerk to serve as guardian is authorized and required to do so; provided, if at the time of the appointment or any time subsequent thereto the disinterested public agent believes that his role or the role of his agency in relation to the ward is such that his service as guardian would constitute a conflict of interest, or if he knows of any other reason that his service as guardian may not be in the ward's best interest, he shall bring such matter to the attention of the clerk and seek the appointment of a different guardian. A disinterested public agent who is appointed as guardian shall serve in that capacity by virtue of his office or employment, which shall be identified in the clerk's order and in the letters of appointment. When the disinterested public agent's office or employment terminates, his successor in office or employment, or his immediate supervisor if there is no successor, shall succeed him as guardian without further proceedings unless the clerk orders otherwise.

(e)        Notwithstanding any other provision of this section, an employee of a treatment facility, as defined in G.S. 35A-1101(16), may not serve as guardian for a ward who is an inpatient in or resident of the facility in which the employee works; provided, this subsection shall not apply to or affect the validity of any appointment of a guardian that occurred before October 1, 1987.

(f) An individual employed by an entity that contracts with a local management entity (LME) for the delivery of mental health, developmental disabilities, and substance abuse services may not serve as a guardian for a ward for whom the individual is providing such services."

SECTION 12.(d)  G.S. 35A-1292(a) reads as rewritten:

"§ 35A-1292.  Resignation.

(a)        Any guardian who wishes to resign may apply in writing to the clerk,shall file a motion with the clerk setting forth the circumstances of the case. If a general guardian or guardian of the estate, at the time of making the application, also exhibits his final account for settlement, and if the clerk is satisfied that the guardian has fully accounted, the clerk may accept the resignation of the guardian and discharge him and appoint a successor guardian, but theguardian. The guardian so discharged and his sureties are still liable in relation to all matters connected with the guardianship before the discharge.discharge and shall continue to ensure that the ward's needs are met until the clerk officially appoints a successor. The guardian shall attend the hearing to modify the guardianship, if physically able."

SECTION 12.(e)  In order to achieve continuity of care and services, any successor guardian shall make diligent efforts to continue existing contracts entered into under the authority of G.S. 122C-122 where consistent with the best interest of the ward, as required by Chapter 35A of the General Statutes.

SECTION 13.(a)  Section 1(a)(3) of S.L. 2011-264 reads as rewritten:

"(3)      Designate a single entityan area authority for mental health, developmental disabilities, and substance abuse services to assume responsibility for all aspects of Waiver management. The following operational models are acceptable options for Local Management Entity (LME) applicants:acceptable:

a.         Merger model: A single larger LME is formed from the merger of two or more LMEs.

b.         Interlocal agreement among LMEs: A single LME is identified as the leader for all Waiver operations, financial management, and accountability for performance measures."

SECTION 13.(b)  Section 1(c) of S.L. 2011-264 reads as rewritten:

"SECTION 1.(c)  The Department shall require LMEs that have not been approved by the Department to operate a 1915(b)/(c) Medicaid Waiver by January 1, 2013, to merge with or be aligned through an interlocal agreement with an LME that has been approved by the Department to operate a 1915(b)/(c) Medicaid Waiver. If any LME fails to comply with this requirement, or fails to meet performance requirements of an approved contract with the Department to operate a 1915(b)/(c) Medicaid Waiver, the Department shall assign responsibility for management of the 1915(b)/(c) Medicaid Waiver on behalf of the noncompliant LME to an LME that is successfully operating the Waiver and successfully meeting performance requirements of the contract with the Department. Those LMEs approved to operate the 1915(b)/(c) Medicaid Waiver under an interlocal agreement must have a single LME entity designated as responsible for all aspects of Waiver operations and solely responsible for meeting contract requirements."

SECTION 14.(a)  Article 4 of Chapter 122C of the General Statutes is amended by adding a new Part to read:

"Part 2B. Behavioral Health Authority.

"§ 122C-29.  Behavioral Health Authority creation; approval and oversight.

A behavioral health authority may be created under the provisions of this Part whenever the governing board of the local management entity, which has been operating as a managed care organization under a 1915(b)/(c) Medicaid Waiver for at least three years, finds and adopts a resolution finding that it is in the interest of the public health and welfare to create a behavioral health authority in order to manage resources that may be available for mental health, intellectual and other developmental disabilities, and substance abuse services. An LME's organization as a behavioral health authority is subject to the approval of the Secretary, which shall be based on the LME's demonstration of successful operation as a managed care organization. The LME shall be subject to periodic review and may be revoked by the Secretary upon a finding that the LME is no longer successfully operating as an managed care organization as defined in 42 C.F.R § 438.2.

"§ 122C-29.1.  Functions of a behavioral health authority.

A behavioral health authority shall perform all the functions necessary to carry out the purposes of this Part, including, but not limited to, the following:

(1) Establish accountability for the development and management of a local system that ensures easy access to care, the availability and delivery of necessary services, and continuity of care for individuals in need of mental health, intellectual and developmental disabilities, and substance abuse services.

(2) Operate the 1915(b)/(c) Medicaid Waiver, a proven system for the management of mental health, intellectual and developmental disabilities, and substance abuse services.

(3) Manage resources that are or become available for mental health, intellectual and developmental disabilities, and substance abuse services.

(4) Use managed care strategies, including care coordination and utilization management, to reduce the trend of escalating costs in the State Medicaid program while ensuring medically necessary care and deploy a system for the allocation of resources based on the reliable assessment of intensity of need. These strategies shall efficiently direct individuals to appropriate services and shall ensure that they receive no more and no less than the amount of services determined to be medically necessary and at the appropriate funding level.

(5) Maintain a local presence in order to respond to the unique needs and priorities of localities.

(6) Ensure communication with consumers, families, providers, and stakeholders regarding disability-specific and general Waiver operations by implementing a process for feedback and exchange of information and ideas.

(7) Establish and maintain systems for ongoing communication and coordination regarding the care of individuals with mental illness, intellectual and developmental disabilities, and substance abuse disorders with other organized systems, such as local departments of social services, Community Care of North Carolina, hospitals, school systems, the Division of Juvenile Justice of the Department of Public Safety, and other community agencies.

(8) Maintain disability-specific infrastructure and competency to address the clinical, treatment, rehabilitative, habilitative, and support needs of all disabilities covered by the 1915(b)/(c) Medicaid Waiver.

(9) Conduct administrative and clinical functions, including requirements for customer service, quality management, due process, provider network development, information technology systems, financial reporting, and staffing.

(10) Maintain full accountability of all aspects of Waiver operations and for meeting all contract requirements specified by the Department of Health and Human Services.

(11) Authorize the utilization of State psychiatric hospitals and other State facilities.

(12) Authorize eligibility determination requests for the 1915(b)/(c) Medicaid Waiver.

"§ 122C-29.2.  Directors of a behavioral health authority.

(a) Upon approval by the Secretary to organize under this part, the area board of the LME shall become the board of directors of the behavioral health authority. Directors shall serve out the term for which they were appointed to the area board. Thereafter, when a director resigns, is removed from office, completes a term of office, or when there is an increase in the number of directors, the election of directors to the Board shall be in accordance with bylaws set forth for such purpose and may be amended as necessary or convenient to carry out the functions, powers, duties, and responsibilities of the behavioral health authority.

(b) At a minimum, the bylaws of the behavioral health authority shall set the number, composition, term, and method of appointment of the board of directors. Membership of the board of directors shall take into account representation of the counties or geographic areas in which the behavioral health authority operates the 1915(b)/(c) Medicaid Waiver and manages resources for mental health, intellectual and developmental disabilities, and substance abuse services and should be comprised of a mix of individuals with the necessary expertise to govern managed care organizations. When possible, the directors should include a physician licensed under Chapter 90 of the General Statutes to practice medicine in North Carolina, and who is board certified in psychiatry; a clinical professional from the fields of mental health, developmental disabilities, or substance abuse; an individual with financial expertise, including previous fiscal oversight experience with large organizations; and at least one family member or individual from a citizens' organization representing the interests of individuals with mental illness, intellectual and developmental disabilities, or substance abuse. An individual that contracts with a behavioral health authority for the delivery of behavioral health care services shall not serve on the board of directors during the period for which the contract for services is in effect.

(c) The Board of Directors shall be responsible for ensuring the behavioral health authority maintains a local presence and is responsive to the unique needs and priorities of localities.

"§ 122C-29.3.  Powers of the behavioral health authority.

(a) A behavioral health authority shall have all powers necessary or convenient to carry out the purposes of this Part, including the following powers, which are in addition to those powers granted elsewhere in this Part:

(1) To engage in comprehensive planning, implementing, and monitoring of community-based mental health, intellectual and developmental disabilities, and substance abuse services, including for individuals committed to the custody of the Department of Social Services and the Division of Juvenile Justice of the Department of Public Safety.

(2) To comply with federal requirements for Medicaid, Medicare, block grants, and other federally funded health care programs.

(3) To perform public relations and community advocacy functions.

(4) To maintain a 24-hour-a-day, seven-day-a-week crisis response service. Crisis response shall include telephone and face-to-face capabilities. Crisis phone response shall include triage and referral to appropriate face-to-face crisis providers. Crisis services do not require prior authorization, but shall be delivered in compliance with appropriate policies and procedures. Crisis services shall be designed for prevention, intervention, and resolution, not merely triage and transfer, and shall be provided in the least restrictive setting possible, consistent with individual and family need and community safety.

(5) To accept donations or money, personal property, or real estate for the benefit of the behavioral health authority and to take title to the same from any person, firm, corporation, or society.

(6) To purchase, lease, obtain options upon, or otherwise acquire any real or personal property or any interest therein from any person, firm, corporation, city, county, government, or society.

(7) To sell, exchange, transfer, assign, or pledge any real or personal property or any interest therein to any person, firm, corporation, city, county, government, or society.

(8) To own, hold, clear, and improve property.

(9) To appoint a chief executive officer and to fix his or her compensation.

(10) To delegate to its agents or employees any powers or duties as it may deem appropriate.

(11) To employ its own counsel and legal staff.

(12) To adopt, amend, and repeal bylaws for the conduct of its business.

(13) To enter into contracts for necessary supplies, equipment, or services for the operation of its business.

(14) To appoint committees or subcommittees as it shall deem advisable, to fix their duties and responsibilities, and to do all things necessary in connection with the management, supervision, control, and operation of the behavioral health authority's business.

(15) To enter into any contracts or other arrangements with any municipality, other public agency of this or any other state or of the United States, or with any individual, private organization, corporation, or nonprofit association for the provision of behavioral health or other services.

(16) To act as an agent for the federal, State, or local government in connection with the management of behavioral health services.

(17) To insure the property or the operations of the behavioral health authority against risks as the behavioral health authority may deem advisable.

(18) To invest any funds held in reserves or sinking funds, or any funds not required for immediate disbursement, in property or securities in which trustees, guardians, executors, administrators, and others acting in a fiduciary capacity may legally invest funds under their control.

(19) To sue and be sued.

(20) To have a seal and to alter it at pleasure.

(21) To have perpetual succession.

(22) To make and execute contracts and other instruments necessary or convenient to the exercise of the powers of the behavioral health authority, including providing services to governmental or private entities, including Employee Assistance Programs.

(23) To provide teaching and instruction programs and schools for psychiatrists, psychologists, psychiatric nurses, technicians and students, interns, and other behavioral health care professionals.

(24) To agree to limitations upon the exercise of any powers conferred upon the behavioral health authority by this Part in connection with any loan by a government.

(b) A behavioral health authority may exercise any or all of the powers conferred upon it by this Part, either generally or directly, or through designated agents, including any corporation or corporations which are or shall be formed under the laws of this State.

(c) No provisions with respect to the acquisition, operation, or disposition of property by other public bodies shall be applicable to a behavioral health authority unless otherwise specified by the General Assembly.

"§ 122C-29.4.  Limited liability.

(a) A person serving as a director, trustee, or officer of a behavioral health authority shall be immune individually from civil liability for monetary damages, except to the extent covered by insurance, for any act or failure to act arising out of this service in any of the following circumstances:

(1) Was not acting within the scope of official duties.

(2) Was not acting in good faith.

(3) Committed gross negligence or willful or wanton misconduct that resulted in the damage or injury.

(4) Derived an improper personal financial benefit from the transaction.

(b) The immunity in subsection (a) of this section is personal to the directors, trustees, and officers and does not immunize a behavioral health authority for liability for the acts or omissions of the directors, trustees, or officers.

(c) In addition to the immunity granted in subsection (a) of this section, a behavioral health authority may waive its governmental immunity from liability for damages caused by the negligence or tort of any agent, employee, or director of the behavioral health authority when acting within the scope of the authority or within the course of the duties or employment of that person. Governmental immunity is waived by the act of obtaining this insurance, but it is waived only to the extent that the behavioral health authority is indemnified by insurance for the negligence or tort.

(d) A behavioral health authority may incur liability pursuant to this section only with respect to a claim arising after the behavioral health authority has procured liability insurance pursuant to this section and during the time when the insurance is in force.

(e) No part of the pleadings that relate to or allege facts as to a defendant's insurance against liability may be read or mentioned in the presence of the trial jury in any action brought pursuant to this section. These issues shall be heard and determined by the judge, and the jury shall be absent during any motions, arguments, testimony, or announcement of findings of fact or conclusions of law with respect to insurance.

(f) Upon request by any agent, employee, or director or former agent, employee, or director, a behavioral health authority may provide for the defense of any civil or criminal action or proceeding brought against the agent, employee, or director, either in that agent's, employee's, or director's official or individual capacity, or both, on account of any act done or omission made, or any act allegedly done or omission allegedly made, in the scope and course of duty as an agent, employee, or director. The defense may be provided by employing counsel or by purchasing insurance that requires the insurer to provide the defense. Nothing in this section requires a behavioral health authority to provide for the defense of any action or proceeding of any nature.

"§ 122C-29.5.  Applicability of the Local Government Budget and Fiscal Control Act.

(a) The Local Government Budget and Fiscal Control Act applies to behavioral health authorities, except that the provisions of Parts 1, 2, and 3 of Article 3 of the Act do not apply to behavioral health authorities, which shall instead be subject to the provisions of this section.

(b) A behavioral health authority shall appoint or designate a finance officer, who shall have the following powers and duties:

(1) Prepare the annual budget for presentation to the governing board of the behavioral health authority and shall administer the budget as approved by the board.

(2) Keep the accounts of the behavioral health authority in accordance with generally accepted principles of accounting.

(3) Prepare and file a statement of the financial condition of the behavioral health authority as revealed by its accounts upon the request of the behavioral health authority's governing board or the governing board of any county, city, or other unit of local government that has issued on behalf of the behavioral health authority and has outstanding its general obligation or revenue bonds or makes current appropriations to the behavioral health authority.

(4) Receive and deposit all moneys accruing to the behavioral health authority, or supervise the receipt and deposit of money by other duly authorized officers or employees of the behavioral health authority.

(5) Supervise the investment of idle funds of the behavioral health authority.

(6) Maintain all records concerning the bonded debt of the behavioral health authority, if any; determine the amount of money that will be required for debt service during each fiscal year; and maintain all sinking funds, but shall not be responsible for records concerning the bonded debt of any county, city, or other unit of local government incurred on behalf of the behavioral health authority.

(c) The Local Government Commission has authority to issue rules and regulations governing procedures for the receipt, deposit, investment, transfer, and disbursement of money and other assets by behavioral health authorities; may inquire into and investigate the internal control procedures of a behavioral health authority; and may require any modifications in internal control procedures which, in the opinion of the Commission, are necessary or desirable to prevent embezzlements, mishandling of funds, or continued operating deficits.

(d) The accounting system of a behavioral health authority shall be so designed that the true financial condition of the behavioral health authority can be determined therefrom at any time. As soon as possible after the close of each fiscal year, the accounts shall be audited by a certified public accountant or by an accountant certified by the Local Government Commission as qualified to audit local government accounts. The auditor shall be selected by and shall report directly to the behavioral health authority's governing board. The audit contract or agreement shall be in writing, shall include all its terms and conditions, and shall be submitted to the secretary of the Local Government Commission for approval as to form, terms, and conditions. The terms and conditions of the audit shall include the scope of the audit and the requirement that upon completion of the examination the auditor shall prepare a written report embodying financial statements and the auditor's opinion and comments relating thereto. The finance officer shall file a copy of the audit with the secretary of the Local Government Commission and with the finance officer of any county, city, or other unit of local government that has issued on behalf of the behavioral health authority and has outstanding its general obligation or revenue bonds or makes current appropriations to the behavioral health authority (other than appropriations for the cost of behavioral health care or programs).

(e) A behavioral health authority may deposit or invest at interest all or part of its cash balance pursuant to G.S. 159-30 and may deposit any funds held in reserves or sinking funds, or any funds not required for immediate disbursement, with the State Treasurer for investment pursuant to G.S. 147-69.2.

(f) A behavioral health authority is subject to G.S. 159-31 with regard to selection of an official depository and security of deposits.

(g) A behavioral health authority is subject to G.S. 159-32 with regard to daily deposits.

(h) A behavioral health authority may accept electronic payments pursuant to G.S. 159-32.1.

(i) A behavioral health authority is subject to G.S. 159-33 with regard to semiannual reports to the Local Government Commission on the status of deposits and investments.

(j) A behavioral health authority having outstanding general obligation or revenue bonds is subject to G.S. 159-35, 159-36, 159-37, and 159-38.

"§ 122C-29.6.  Revenue bonds and purchase money security interests.

(a) A behavioral health authority shall have the power to issue revenue bonds under the Local Government Revenue Bond Act, Article 5 of Chapter 159 of the General Statutes, or the bond and revenue anticipation provisions of Article 9 of Chapter 159 of the General Statutes for the purpose of acquiring, constructing, reconstructing, improving, enlarging, bettering, equipping, extending, or operating behavioral health facilities.

(b) A behavioral health authority shall have the power to borrow for the purposes above enumerated upon its notes or other evidences of indebtedness, subject to the approval of the Local Government Commission. Such approval shall be required regardless of the amount of any such borrowing.

(c) A behavioral health authority shall have the power and authority to purchase real or personal property under installment contracts, purchase money mortgages or deeds of trust, or other instruments, which create in the property purchased a security interest to secure payment of the purchase price and interest thereon. No deficiency judgment may be rendered against a behavioral health authority for breach of an obligation authorized by this section.

(d) A behavioral health authority may contract pursuant to this section in an amount less than five million dollars ($5,000,000) in any single transaction without the approval of the Local Government Commission; provided, however, that the approval of the Local Government Commission shall be required for any single contract pursuant to this section if the aggregate dollar amount of all such contracts outstanding after any such single transaction would exceed ten percent (10%) of the total operating revenues, as hereinafter defined, of the behavioral health authority for its most recently completed fiscal year as set forth in the audited financial statements of such behavioral health authority for such fiscal year.

(e) Approval of the Local Government Commission under this section shall be obtained in accordance with such rules and regulations as the Local Government Commission may prescribe and shall be evidenced by the Secretary of the Commission's certificate on the contract or note or other evidence of indebtedness. In determining whether to approve any such contract or borrowing, the Local Government Commission shall consider whether the behavioral health authority can demonstrate the financial responsibility and capability of the behavioral health authority to fulfill its obligations with respect to such contract or borrowing. Any contract or borrowing subject to this subsection requiring the approval of the Local Government Commission that does not bear the Secretary of the Commission's certificate thereon shall be void, and it shall be unlawful for any officer, employee, or agent of a behavioral health authority to make any payments of money thereunder. An order of the Local Government Commission approving any such contract or borrowing shall not be regarded as an approval of the legality of the contract or borrowing in any respect.

(f) For purposes of this section, the "total operating revenues" of a behavioral health authority for a fiscal year means revenue, less provisions for contractual adjustments, plus other operating revenues, all as determined in accordance with generally accepted accounting principles.

"§ 122C-29.7.  Local Consumer and Family Advisory Committees.

A behavioral health authority shall establish Local Consumer and Family Advisory Committees in accordance with G.S. 122C-170.

"§ 122C-29.8.  Client rights and human rights committees.

A behavioral health authority shall adopt the State's policy on client rights as contained in G.S. 122C-51 and establish client rights and human rights committees responsible for protecting the rights of clients in accordance with G.S. 122C-64.

"§ 122C-29.9.  Involuntary commitments.

A behavioral health authority shall have the same duties and responsibilities for involuntary commitments as area authorities created pursuant to G.S. 122C-115(c).

"§ 122C-29.10.  Grievance system.

(a) A behavioral health authority shall establish Medicaid grievance procedures as required by the federal Medicaid managed care rules and as approved by the Secretary. Such grievance procedures shall provide a process by which consumers and providers may challenge the Medicaid denial of coverage of, or payment for, mental health, intellectual and developmental disabilities, or substance abuse services.

(b) A behavioral health authority shall comply with the provisions contained in G.S. 122C-151.4 for consumer and provider appeals.

"§ 122C-29.11.  Public guardians.

A behavioral health authority does not qualify as a disinterested public agent and may not serve as the guardian for an individual adjudicated incompetent under the provisions of Subchapter I of Chapter 35A of the General Statutes. A behavioral health authority may not contract with a third party to serve as a guardian for an individual that is, or would be, eligible to have behavioral health care managed by the behavioral health authority.

"§ 122C-29.12.  Confidentiality of competitive health care information.

(a) A behavioral health authority is subject to all consumer confidentiality requirements and State public records laws, except that the disclosure of competitive health care information shall be pursuant to the provisions of this section.

(b) For purposes of this section, competitive health care information means information relating to competitive health care activities by or on behalf of a behavioral health authority. Competitive health care information shall be confidential and not a public record under Chapter 132 of the General Statutes.

(c) If a behavioral health authority is requested to disclose any material which the behavioral health authority believes in good faith contains or constitutes competitive health care information, the behavioral health authority may either redact the portions believed to constitute competitive health care information prior to disclosure or refuse to disclose the material in its entirety. The person requesting disclosure may institute an action pursuant to G.S. 132-9 to compel disclosure of the contract or any redacted portion thereof. In any action brought under this subsection, the issue for decisions by the court shall be whether the material constitutes competitive health care information, and in making its determination, the court shall be guided by the procedures and standards applicable to protective orders requested under Rule 26(c)(7) of the Rules of Civil Procedure.

(d) Nothing in this section shall be deemed to prevent an elected public body, in closed session, which has responsibility for the behavioral health authority, the Attorney General, or the State Auditor from having access to this confidential information. The disclosure to any public entity does not affect the confidentiality of the information. Members of the public entity shall have a duty not to further disclose the confidential information."

"§ 122C-29.13.  Part controlling.

Insofar as the provisions of this Part are inconsistent with the provisions of any other law, the provisions of this Part shall be controlling. Except as provided for in this Part, the provisions of Chapter 122C of the General Statutes do not apply to behavioral health authorities created under this Part."

SECTION 14.(b)  G.S. 122C-3(20b) reads as rewritten:

"(20b)  "Local management entity" or "LME" means an area authority, county program, behavioral health authority, or consolidated human services agency. It is a collective term that refers to functional responsibilities rather than governance structure."

SECTION 15.  This act is effective when it becomes law.