CMS Considers Reimbursing Care at Private Psychiatric Hospitals

Eleven states and the District of Columbia have been selected to participate in the Medicaid Emergency Psychiatric Demonstration, an effort to address Medicaid’s current exclusion of coverage for services provided to beneficiaries at “institutions for mental disease” (IMDs).

As a result of this exclusion, many Medicaid enrollees with acute psychiatric needs are diverted to the emergency departments of local general hospitals, which often lack the resources or expertise required to provide appropriate and timely care for such patients.

The new demonstration project, announced by the Centers for Medicare and Medicaid Services (CMS) on March 13, is designed to address the IMD exclusion by testing whether Medicaid programs can support higher-quality care at a total lower cost by reimbursing private psychiatric hospitals for certain services for which Medicaid reimbursement has historically been unavailable.

The project will also assess whether such expanded coverage can reduce the burden currently placed on general acute care hospital emergency departments.

Established under Section 2707 of the Affordable Care Act, the demonstration will provide up to $75 million in federal Medicaid matching funds over three years to enable private psychiatric hospitals with 17 or more beds to receive reimbursement for the treatment of beneficiaries aged 21 to 64 who present with “suicidal or homicidal thoughts or gestures.”

“This project is an outstanding opportunity to improve patient care for seriously mentally ill Medicaid beneficiaries, as well as a way to try and save costs for local governments and potentially help reduce financial cuts to mental health services in the states and counties where the demonstration will operate,” said Robert Cabaj, M.D., chair of APA’s Council on Advocacy and Government Relations. “If the demonstration is successful and shows both improved care and cost savings, it may be the proof that Congress needs to finally end the IMD exclusion from Medicaid, which many of us providers in the public sector have seen as discriminatory and a major obstacle to the highest-quality care for our patients with serious mental illnesses.”

The states selected to participate in the project are Alabama, California, Connecticut, Illinois, Maine, Maryland, Missouri, North Carolina, Rhode Island, Washington, and West Virginia.

CMS noted that the demonstration will be administered by the Center for Medicare and Medicaid Innovation created under the Affordable Care Act, which also requires that the program be evaluated and reported on to Congress.

CMS’s partners in development of the project included the National Association of Psychiatric Health Systems, the Department of Health and Human Service’s Office of the Assistant Secretary for Planning and Evaluation, and the Substance Abuse and Mental Health Services Administration.

More information about the Medicaid Emergency Psychiatric Demonstration is posted at http://innovations.cms.gov/initiatives/medicaid-emergency-psychiatric-demo.