The Obama administration has moved to cancel Medicaid regulation changes
that would have severely tightened access to several programs, including care
coordination for people with mental illness—a program for which APA has
The Medicaid regulatory revisions—most of which have yet to go into
effect—were among seven packages of administrative changes that the Bush
administration had sought to implement for several years to reduce costs and
eliminate Medicaid activities not explicitly authorized to receive federal
Mental health advocates, including APA, argued that the changes would have
negatively impacted many Medicaid beneficiaries who have come to rely on the
services. Reductions in targeted case management (TCM), which coordinates
services and treatment for many beneficiaries with serious mental illness
transitioning from inpatient settings to the community, were especially
opposed by APA.
"People with serious and persistent mental illness need to have their
services coordinated, including making sure they are receiving the treatment
they need, where they live," as well as receiving other assistance, said
Lizbet Boroughs, associate director of APA's Department of Government
The TCM changes had progressed through the regulatory process and become
finalized, so federal regulators have asked for public comment on a new rule
to reverse those regulations.
"In discussions with states about the implementation of
case-management requirements, we have become concerned that certain provisions
of the [proposed Medicaid regulations] may unduly restrict beneficiary access
to needed, covered case-management services and limit state flexibility in
determining efficient and effective delivery systems for case management
services," regulators wrote in a May 6 notice of regulations to reverse
the TCM restrictions.
Other Bush administration Medicaid changes to be reversed by the Obama
administration would have restricted coverage of rehabilitation services for
Medicaid-eligible people with disabilities, barred schools from providing"
administrative services" for Medicaid-covered children,
restricted what states can cover as hospital outpatient Medicaid services,
eliminated Medicaid support for graduate medical education, restricted the
ways in which states could raise funds to support their share of Medicaid, and
limited Medicaid payments to public hospitals and other "safety
net" providers and facilities.
When Bush was still in office, officials at the Centers for Medicare and
Medicaid Services (CMS) said that the regulatory changes were needed to
eliminate services that Congress never intended to fund and to control the
program's growth. The changes would have saved an estimated $17 billion of the
program's expected five-year spending total of $1.2 trillion, according to
The changes drew widespread opposition in Congress after the Congressional
Budget Office estimated that the TCM changes alone would cut Medicaid payments
to states by almost twice as much as the $760 million over five years that was
intended by the Bush administration. (Medicaid is jointly funded by the
federal government and the states.)
Boroughs said the Bush administration changes would have resulted in many
additional costs that would have considerably reduced the estimated savings.
For example, Medicaid beneficiaries who were unable to adhere to prescribed
treatment regimens once TCM was restricted could become so ill that they would
require costly hospitalization.
The concerns about the impact of the changes led Congress to repeatedly
delay their implementation beyond the original implementation date of May 25,
2007 (Psychiatric News, August 1, 2008). Opponents of the
changes—including governors and state legislators—said the
congressional delays were needed to allow whomever replaced President Bush to
review the regulations and, they hoped, reverse them.
Among those condemning the Medicaid changes was New York Gov. David
Paterson (D), who wrote in a statement issued in May that they "would
have limited New York's and other states' flexibility and could have impeded
states from providing the most effective health care possible in the right
setting at the right price."
The Obama administration's Medicaid regulatory reversal followed approval
of an $87 billion boost in the federal share of Medicaid provided through the
stimulus law (the American Recovery and Reinvestment Act; PL 111-5). The
temporary increase in the share of Medicaid that the federal government would
pay through the end of calendar year 2010 was approved as 46 states announced
they were facing budget deficits.
The Department of Health and Human Services' announcement of the
rescission of the Medicaid rules and related actions is posted in the May