Portland officials say the situation is particularly dire in their city, where the largest of the affected programs, the Milestone Foundation, will have to cut 43 of its 59 beds. The vast majority of their clients are homeless, and will have to go to a city shelter so crowded that overflow space has been needed through the summer.

“They’ve been going to the Milestone Foundation for 40 years–my real fear is that they’re going to be so disrupted and confused by the sudden changes, somebody’s going to die on the streets,” says Tom Allan, Milestone’s executive director.

Although he had heard that these changes were being discussed at the federal level, Allan says it was not until Oct. 13 that he learned he had to shrink his agency by November 1st to keep getting Medicaid payments. Allan says he needs more time to better prepare his clients, who will now have to split their time between a day shelter before moving to the overflow shelter at night to sleep, if they make it to either.

“It’s similar to someone who found out that they just lost their home,” Allan says. “I mean, they’re so vulnerable and there’s one place where they can go every night and be safe and feel taken care of and not have to worry about all the stigma that’s attached to being homeless and being chronically mentally ill and being addicted to substances,” Allan says.

While Allan and other agency heads say they would have liked more of a heads-up, they refrain from assigning blame for the changes. The fact is, says Guy Cousins, who oversees the state’s Office of Substance Abuse, the federal government only agreed to match the state’s Medicaid payments to these agencies if they had 16 beds and under, the idea being “anything that’s larger than 16 really is an institution and actually perpetuates the stigma associated with mental illness, mental disease,” Cousins says.

Cousins says the goal is to promote community-based services instead. He says agencies with over 16 beds have been able to get reimbursement over the last decade or so since the feds and the state agreed to split their reimbursement.
But “how the regulations are now being defined, understood, and enforced are different from when the people who were responsible for constructing it–how they understood it,” he says.

Cousins says the Department of Justice is also trying to enforce the Supreme Court’s Olmstead decision, which favored community-based care for people with disabilities. He says a similar review of programs has also taken place in North Carolina.

But Stacy Morris says that her Auburn agency provides the targeted, specialized care that people in recovery need, as well as a substance-free space. “For many of these men being in a program like this is the first time that they would be sober for Christmas,” she says.

Morris works as clinical director the St. Francis Recovery Center and Halfway House, which is losing half of its 32 beds. Also losing beds–17 out of 33 beds, to be exact–is Portland’s Serenity House, which the city’s social service providers say is a critical place to refer clients who need long-term treatment.

In Portland, social service providers are bracing for Monday night, when Milestone clients will have to shift their sleeping location to Preble Street, a center that provides shelter to people crowded out of the city’s shelter. Mark Swann, Preble Street’s director, fears the worst.

“Frankly, the fragility of the people who are coming into these shelters–there’s going to be people who die on the streets of Portland this winter,” Swann says. “I’m certain of it, and I’ve been here 20 years and I’ve never said that.”

Swann says the situation is unsustainable. Nearly 200 people are already living in the city shelter, and in overflow space. “There’s been, just the last couple of days, a frantic amount of planning and work between Milestone, Preble Street and the city, so I think the band-aid will hold, but it’s still a band-aid.”

Milestone says it will also dispatch staff to work into the night to make sure that former residents know they still have somewhere to go.

The regional spokeswoman for CMS could not be reached for this story.