WakeMed Health & Hospitals is the 800-pound gorilla of health care in Wake County. With 810 beds at its ever-expanding Raleigh campus and at four other locations, and an annual budget of more than $800 million, it’s easily the county’s biggest health organization and, its leadership argues, the hardest-working.

But when WakeMed went to the N.C. Department of Health and Human Services this month for approval to add to its surgical and outpatient diagnostic facilities, the meeting was picketed by members of the Wake County chapter of NAMI, the National Alliance on Mental Illness.

The group’s complaint is that WakeMed isn’t providing enough services for the mentally ill, particularly with respect to establishing a designated psychiatric unit. “We don’t want WakeMed to get another building until they get those [beds],” says Ann Akland, co-president of Wake-NAMI.

WakeMed CEO Bill Atkinson told the Indy he shares the group’s frustrations about the ragged state of mental health care in North Carolina and nationally. But singling out WakeMed for criticism was “insulting and ridiculous.”

Behind the flare-up is what Atkinson calls an “antiquated” federal law that prevents stand-alone psychiatric hospitals from billing Medicaid for mental health services. Only medical/surgical hospitals can do soif they have a designated psychiatric unit.

The law was designed to keep state mental hospitals like Dorothea Dix in Raleigh from sending their bills to Washington, D.C. But it also prevents Holly Hill, Raleigh’s only private psychiatric hospital and one of just two in North Carolina, from billing Medicaid, a federal-state program for the poor in which the federal government pays most of the costs.

As Wake-NAMI sees it, the problem is that none of Wake County’s three medical/surgical hospitalsWakeMed, Rex and Duke Raleighhas a designated psychiatric unit and thus can’t accept patients who are on Medicaid.

Since UNC Hospitals, which owns Rex, does have a psychiatric unit in Orange County, and DukeMed, which owns Duke Raleigh, has one in Durham, Wake-NAMI’s members think WakeMed should create such a unit in Wake County, Akland says.

Until there is such a facility, Akland says, Medicaid patients requiring psychiatric hospital stays are being transported from Wake County to UNC, Duke or Coastal Plains Hospital in Nash County. WakeMed patients who are transported go in an ambulanceone of the hospital’s Mobile Critical Care vehicles. But other hospitals call the sheriff’s office, which means, according to Akland and other NAMI members, that the person is handcuffed and placed in the back seat of a patrol car for their own and the officer’s safety. “The deputy was as sweet and caring as he could be,” says Rob Myers, relating one such incident involving a family member, “but it’s still a demeaning process.”

Akland’s missing the real story, Atkinson says, which is that WakeMed treats many psychiatric patients, including Medicaid recipients. They come into the hospital with medical as well as psychiatric needs, he says, and WakeMed treats them for both conditions. In fact, Wake Med recently added a third psychiatrist to its medical staffthough it’s able to bill Medicaid only for the medical portion.

“On any given day, we will have 20 patients in beds with a primary or secondary [psychiatric] diagnosis,” Atkinson says. Wake County’s lack of a psychiatric unit can be traced to the presence of Dorothea Dix in Raleigh. It’s gradually being closed by the state, to be replaced by a new mental health hospital in Butner in Granville County. The number of remaining beds at Dix “is vacillating,” Atkinson says, adding to the uncertainty that patients’ families experience.

Meanwhile, many psychiatric beds at UNC, Duke and other hospitals in the region are unfilled each day, Atkinson says, and have room for Medicaid patients from Wake Countyalthough they must be transported.

The answer to these issues is national health care reform, including parity for mental health and medical patients and an end to the out-dated Medicaid law, Atkinson says.

Until that happens, Atkinson argues, WakeMed is carrying more than its share of uncompensated care for the poorthe second-highest load in the state behind Charlotte-Mecklenburg Hospital. So asking WakeMed to take on “another round of service” for which it won’t be paid, and for which there are empty beds nearby, he says, “is neither reasonable, practical nor possible.”

Correction (Aug. 27, 2009): NAMI stands for National Alliance on Mental Illness.