MH Advocates Hope Congress Will Delay Medicaid Changes

House and Senate leaders have introduced measures that would roll back administrative changes to Medicaid—changes that have drawn the fire of many health care advocates, including APA.

The legislation (HR 5613) would place a one-year moratorium on seven regulatory changes to the Medicaid program that were administratively implemented to cut as much as $13 billion from the program over the next five years.

The Bush administration said the changes are needed to address “fraud and abuse” in Medicaid and to improve its long-term fiscal outlook, according to Dennis Smith, director of the Center for Medicaid and State Operations at the Centers for Medicare and Medicaid Services (CMS).

The moratorium is needed, according to its supporters, because the“ unprecedented” reductions in the program's growth are far larger than the administration had described—actually cutting as much as $50 billion from the program over five years, according to estimates by the House Oversight and Government Reform Committee. The loss of such federal funding would result in a shift of much of the program's financial burden onto the states and the denial of services for many vulnerable recipients, including many with mental illness (Psychiatric News, January 18).

“If the administration's cuts move forward, those most in need will pay the highest price,” said Rep. John Dingell (D-Mich.), chair of the Energy and Commerce Committee and the bill's sponsor.

The committee's Health Subcommittee unanimously approved the bill on April 9, and the full committee approved it on April 16.

APA and others advocates have strongly criticized the administrative changes, especially one that tightens the use of targeted case management (TCM)—a program that coordinates the range of health care and support services needed by people with disabilities. The TCM changes, which went into effect under an interim final rule on March 3, bar federal funding to school-based medical services for children with disabilities and set a limit of one case manager per child.

Federal Medicaid officials have agreed to give some states a couple of years to implement the TCM changes, according to congressional testimony on the moratorium bill. However, other state Medicaid offices have sought emergency increases in state funding to make up for the immediate loss of federal funding for their TCM programs. Georgia's office, for example, requested $13 million in emergency funding.

Other proposed administrative Medicaid changes were delayed until July 1 through previously passed legislation.

The TCM changes directly impact child telepsychiatry programs funded through Medicaid, said pediatrician Marsha Raulerson, M.D., in testimony before the Health Subcommittee. One TCM-funded program with which she works in Alabama is coordinated by a case manager, who sees the child at home, school, and during emergencies. Many such positions may be cut under the changes.

The TCM changes also were targeted by an amendment added to a Senate-passed Indian health care bill (S 1200). That bill, which awaits action in the House, would delay the TCM rule until April 2009.

Needed Reform vs. Needed Services

Federal and state government representatives and administrators have struggled for many years over what share of Medicaid each should bear. The struggle has intensified due to the program's ballooning costs, which have risen much faster than the rate of inflation and now are the largest slice of state budgets.

The federal regulatory changes, which were first proposed in 2007, aim to control the surging cost of the program by curtailing what officials at CMS describe as improper schemes by states to draw higher-than-qualified federal Medicaid payments.

Targeted case management has long been used by the states “not as a tool to improve health status of Medicaid recipients, but simply as a supplement for state and local budgets,” Smith said in congressional testimony.

State officials counter that the tightening of federal guidelines on the services for which it will reimburse the states breaks with decades of practice and the long-held understanding by state officials. The cuts in federal funding also come amid a slowing economy that has states already struggling with major budget shortfalls.

Big Mental Health Impact

The impact on people with mental illness is expected to be especially hard under the TCM changes and under another rule that affects the amount of rehabilitative services that Medicaid funds.

John Folkemer, deputy secretary of the Maryland Department of Health and Mental Hygiene, said one effect of the regulatory cuts likely would be the institutionalization of some of the 30,650 Medicaid recipients who receive case management services that allow them to live in the community. Medicaid funding provided rehabilitation services in 2004 to about 1.5 million beneficiaries, three-quarters of whom suffer from mental illness, according to Rep. Frank Pallone Jr. (D-N.J.).

“Under this regulation, states would be restricted from providing these individuals with rehabilitation services, leading to potentially explosive numbers of reinstitutionalized individuals,” Pallone said at an April hearing.

Citing the many negative effects of the regulatory changes, the National Association of State Medicaid Directors (NASMD) also endorsed the one-year moratorium to avoid abrupt disruptions in service to many of the 62 million Americans who receive comprehensive health care coverage through Medicaid. At the least, states need “more realistic time-frames for implementation of new regulations, particularly for regulations that change existing federal policy as reflected in years of approved state plans,” said Barbara Coulter Edwards, interim director of NASMD, in congressional testimony.

The Association of American Medical Colleges (AAMC) also raised concerns about the regulatory changes. In an April 2 letter to members of Congress, the AAMC said a moratorium was needed to prevent the elimination of Medicaid funding for graduate medical education. Such a change would reduce the number of physicians teaching hospitals could train, according to AAMC.

The text of the regulatory moratorium bills can be accessed at<http://thomas.loc.gov> by searching on the bill numbers, HR 5613 and S 1200. ▪