To provide quality behavioral health services on a sustainable basis for West Michigan, the Michigan Department of Health and Human Services (MDHHS) is cancelling its contract with Lakeshore Regional Entity (LRE) and will establish a new pre-paid inpatient health plan (PIHP) in the region, building on recent work there with Beacon Health Options. 
LRE is the PIHP for Allegan, Ottawa, Kent, Muskegon, Oceana, Mason and Lake counties. Medicaid behavioral health specialty services are administered through PIHPs, which are managed care entities required to provide all medically necessary services through community mental health authorities (CMHs). 
MDHHS notified LRE of its intent to cancel the contract on April 25. MDHHS later received a response from LRE and met with multiple stakeholders in the region. After reviewing the response, MDHHS decided to terminate the contract based on many factors. According to a press release from MDHHS, recognizing projected shortfalls in a number of PIHP regions, MDHHS has requested supplemental funding from the legislature for all PIHPs for 2019, consistent with actuarial soundness. MDHHS also said that funding will not fully address LRE’s funding shortfall nor its management challenges. 
MDHHS intends to keep the region intact and will initiate temporary state management when the contract with LRE ends. The state will seek to establish a new PIHP to serve beneficiaries. 
Over the last few months, Beacon Health Options has been operating with LRE to provide managed care support to the CMHs. Due to the progress being made by the work with Beacon Health Options and the value of this partnership reported by CMHs, MDHHS will seek to establish a temporary contract with Beacon that will allow this work to continue until such time as a PIHP contract may be formally procured. 
Individuals receiving services from community mental health service providers in this region will continue to receive the medically necessary services authorized in their person-centered plans of care and retain access to their existing providers.