Psychiatric Hospitals Could Gain Right to Medicaid Reimbursement

Legislation enabling nonpublic psychiatric hospitals to receive Medicaid reimbursement for stabilization of medication-eligible patients transferred from public hospitals was introduced in Congress last month.

The Medicaid Psychiatric Fairness Act, introduced by Sen. Olympia Snowe (D-Maine) and Sen. Kent Conrad (D-N.D.), addresses a conflict in existing federal laws and regulations that has resulted in nonpublic psychiatric hospitals having to provide uncompensated care to patients who are eligible for Medicaid.

The bill is supported by APA and by the National Association of Psychiatric Health Systems, among others.

Michael Strazzella, deputy director for congressional relations in APA’s Division of Government Relations, explained that the conflict is between the legal requirements of the Emergency Medical Treatment and Labor Act (EMTALA) and a Medicaid regulation governing reimbursement for care of psychiatric emergency patients transferred to nonpublic hospitals.

Under EMTALA, hospitals are required to stabilize an emergency room patient regardless of insurance status or ability to pay. For psychiatric patients, especially, stabilization is likely to require admission. Yet many general hospitals do not have psychiatric beds because reimbursement rates are so low, while others are too full to take patients.

As a result, emergency patients are being transferred from general hospital emergency rooms to nonpublic community psychiatric hospitals, Strazzella said.

But while a general hospital is reimbursed for inpatient psychiatric care provided to Medicaid-eligible EMTALA patients, a psychiatric facility is not. That’s because of the Institution for Mental Diseases (IMD) exclusion in the Medicaid laws prohibiting a psychiatric facility from claiming reimbursement for any services rendered to a patient who is a Medicaid beneficiary between the ages of 21 and 64.

The IMD exclusion was enacted in 1965 to prevent states from transferring financial responsibility for long-term-care patients in state psychiatric hospitals to the Medicaid program.

But Strazzella said that the delivery of mental health services has changed radically since that time, and that nonpublic community psychiatric hospitals are now the safety net for many who have serious mental illness. The EMTALA/Medicaid conflict puts these hospitals in the position of having to provide care for these patients without compensation, even though the patients are eligible for Medicaid.

In letters to Snowe and Conrad, APA President Marcia Goin, M.D., expressed the Association’s support of the bill. “Your legislation will allow nonpublic psychiatric hospitals from receiving Medicaid reimbursement for Medicaid patients between the ages of 21 and 64 that have required stabilization as a result of EMTALA,” Goin wrote. ▪