Psych hospitals seek alternative as Medicaid pilot funding ends
A CMS demonstration providing Medicaid payment for residential mental health services in 11 states ended abruptly in April, leaving patients and providers up in the air.
Since the creation of Medicaid 50 years ago, the program has excluded payment for institutions of mental disease (IMDs), a classification that includes most residential treatment facilities for mental health and substance-abuse disorders with more than 16 beds.
The Affordable Care Act authorized $75 million over three years for the Medicaid Emergency Psychiatric Demonstration. The initiative, administered by the CMS Innovation Center, was to test whether Medicaid could get higher quality care at a lower overall cost by covering emergency care at private psychiatric hospitals.
Eleven states and the District of Columbia participated in the program, which started in July 2012 and was supposed to end December 2015. But the hospitals were notified in April that the program was ending early because funding was exhausted. “Suddenly, the funds just stopped, and we might not even get paid for some of the services we’ve already provided,” said Dr. Azfar Malik, CEO of CenterPointe Hospital, a psychiatric facility in St. Charles, Mo.
Providers suspect the money ran out because the Medicaid rolls bulged beginning in 2014 when the ACA Medicaid expansion took effect.
A CMS spokeswoman declined to comment on why the program ended and said there were no plans to extend the demonstration. A final evaluation report is not due until September 2016.
Mark Covall, president of the National Association of Psychiatric Health Systems, said the IMD exclusion has caused Medicaid beneficiaries with mental illness to endure long stays in general hospital emergency departments. If no beds are available at a general hospital, emergency psychiatric patients are referred to standalone psychiatric facilities. Under federal law, those facilities can’t deny admission even though Medicaid won’t pay them because of the IMD exclusion. As a result, providers say, the patients often are discharged early and receive lower-quality care.
Covall’s group is lobbying Congress to extend the demonstration through September 2016 so that Medicaid would continue to pay for the services until lawmakers can review the results. A Senate bill with bipartisan support was introduced in February, but there has been no movement on it. The Obama administration plans to test another strategy to address Medicaid’s IMD exclusion.
The CMS this month proposed that Medicaid managed-care plans be allowed to pay private psychiatric facilities for short-term stays.
While some psychiatric facilities have praised the proposal, others were disappointed that stays would be limited to 15 days. “Some of the individu- als are profoundly ill and the 15-day limit could pose a significant challenge in terms of being able to care for these people,” said Dr. Lawrence Price, president of Butler Hospital in Providence, R.I. There was no such limitation for the demonstration, he added.
Alabama’s Medicaid program doesn’t contract with managed-care plans, said Tuerk Schlesinger, CEO of AltaPointe Health Systems in Mobile, Ala., which had two psychiatric facilities participating in the CMS demonstration. So his facilities are excluded under the proposal.
Few beds are available for severely mentally ill people in his state, and continuing to care for the patients without payment would be financially catastrophic for his company. “We wouldn’t be able to stay open very long,” he said.