PAM KELLEY

RALEIGH, NC - Come July, rules governing the group homes that care for hundreds of North Carolina's mentally ill children are set to get tougher.

North Carolina's Mental Health Commission gave its final approval Wednesday to rules mandating higher staffing levels and other new requirements, effective July 1. The changes still must win approval from the state's Rules Review Commission.

The move corrects an error that has cost the state tens of millions of dollars since 2001, when officials raised group home reimbursements to pay for better staffing, but never enacted rules to require it. That mistake helped create a system that allowed many poor-quality group homes to flourish, the Observer reported in January.

Many mental health professionals laud the new rules as a major step in fixing North Carolina's broken group home system. "It will increase the quality of care," Grayce Crockett, executive director of Mecklenburg's area mental health agency, said this week.

The changes have been controversial. They're more extensive than those that were to have accompanied the 2001 rate increase. But N.C. mental health officials until recently maintained the changes wouldn't raise the cost of operating group homes.

Many of the state's leading group home providers say that's not true. They've warned that the increased costs of following these rules could drive them out of business and leave some children without care. In fact, Elon Homes for Children in Charlotte has already decided to close group home beds covered under the new rules because of the increased expense, one speaker told Mental Health Commission members Wednesday.

Austin Connors, executive director of the Children & Family Services Association of North Carolina, which represents nonprofit group home operators, read a letter from Elon Homes President Fred Grosse explaining his decision to close some beds because the state's current reimbursement rate won't pay for care required under the rules. "One truly wonders what will happen to these children," Grosse wrote.

Interviewed by the Observer after the meeting, Grosse said his company will close a six-bed home in Charlotte but continue other services.

N.C. mental health officials say they'll revisit reimbursement rates to see if a rate increase is needed. But group home providers warned that good group homes will close beds in the meantime.

Several commission members said they don't want that to happen. If good homes close, "where are we going with these kids?" asked commission member Clayton Cone of Davidson County.

Some representatives of group home providers suggested that the commission hold off approving the new rules until the state can raise reimbursement rates.

But the group opted to approve the rules now and urge state mental health officials to quickly study whether a rate increase is needed. N.C. Deputy Mental Health Director Leza Wainwright told members that gathering data to determine whether new rates are warranted needn't take long. "I don't think there has to be a disconnect between the new rules and rates," she said.

The biggest rule change focuses on staffing. Currently, group homes must provide only one worker for up to four children. The new rules will require two staff members for up to four children, three for five to eight children and four staff for nine to 12 children.