While we still believe Albemarle Mental Health Center director Charlie Franklin is wrong to accept nearly a quarter-of-a-million dollars in salary a year, we couldn’t agree more with him about the privatization of the state’s mental health services.

Franklin told this newspaper back in May 2006 that the state Department of Health and Human Services’ move to farm out most mental health services to private companies was the wrong thing to do, calling it “therapeutically disastrous” for the state’s mentally ill patients.

We don’t know yet how privatizing mental health services has worked out for patients. But we can see pretty clearly how it’s working out for taxpayers. To use Franklin’s word: “disastrously.”

Officials with DHHS acknowledged before a legislative oversight committee recently that up to 185 private firms given contracts to deliver certain mental health services since March 2006 had billed the state and federal governments for some $45 million in unnecessary services. The overbilling was caught during recently completed audits of the firms, most of whom participated in DHHS’ community-support services program. The CSS program, part of the state’s reform of the mental health care system, is designed to keep persons with mental illnesses and substance abuse problems from being institutionalized by providing them assistance in their homes. Roughly 700 firms, both for-profit and nonprofit, are paid more than $50 an hour to work with these individuals.

One of the those firms, Elizabeth City-based American Health and Human Services, apparently billed the state for $271,000 in unnecessary charges. DHHS is now in the process of recovering those funds — most of which come from Medicaid dollars — demanding that AHHS and the other firms that overbilled pay the monies back.

DHHS officials are also investigating AHHS and the other firms to determine whether the overbilling was an honest mistake or outright fraud. Given the level of overbillings, it’s hard to imagine that any of it was innocent. Those firms that knowingly tried to bilk the state will be referred to the state Attorney General’s Office for possible prosecution. We would hope those that have broken laws would be prosecuted to the law’s full extent.

DHHS also has taken steps to tighten up the state’s current expenditures on the CSS program. It’s capped the number of providers now receiving Medicaid dollars. It’s also withholding 10 percent of future payments from those firms that have already been caught overbilling the state.

While these measures are certainly appropriate, we do wonder why DHHS took so long to determine they were needed. The waste and thievery was well under way before DHHS officials decided to provide the kind of oversight taxpayers have a right to expect when so much of their money is at stake. Lawmakers need to get to the bottom of who at the agency should have been responsible for overseeing the CSS program and hold them accountable for not safeguarding taxpayers’ money..

Representatives of the firms participating in the CSS program seem to lay the blame for the overbillings at the state’s feet, telling lawmakers that DHHS had not set down clear rules for the mental health care providers to follow. There’s strong evidence to believe them, especially given that the state is now on pace to overspend its budget for these mental health services.

DHHS’ critics have also pointed to the agency’s decision, as part of an ongoing effort to “reform” mental health care services, to hire ValueOptions, a Virginia-based firm, to be the gatekeepers for the CSS program. It was ValueOptions’ job, as spokesman Tom Warburton told The Daily Advance in 2006, “to review ... authorization (for mental health services) to make sure it is compliant with Medicaid and that the level of care is appropriate ... (and) in line with clinical criteria set forth by the state.”

Given the results of the recent audits, ValueOptions clearly hasn’t done its job. State officials need to look at ending DHHS’ contract with the firm as soon as possible.

As for Franklin, it’s too bad his warnings weren’t heeded earlier. The AMHC chief last year decried DHHS’ decision to hire ValueOptions to evaluate mental health care services for Medicaid patients, claiming that taking this function away from public mental health agencies like AMHC and privatizing it would be disastrous for middle-class patients. Franklin’s predictions unfortunately have come true. Privatization of mental health services is a disaster. It’s time to reform the reforms.