MH Experts Wary About Law on Medicaid Changes

Although federal officials refer to newly approved Medicaid programs in Kentucky and West Virginia as “historic,” mental health professionals have mixed reactions to their likely impact on patients.

The two states were the first to receive federal approval of redesigns of their Medicaid programs under the Deficit Reduction Act of 2005 (DRA, PL 109-171), which gave states more flexibility to design Medicaid programs with increased cost-sharing for some services and populations.

The federal Centers for Medicare and Medicaid Services (CMS) approved the two state plans in early April, although both are still finalizing some components.

The redesigns, which unlike past Medicaid waivers are permanent, strive to tailor Medicaid service to the age and health status of individual recipients. Prior to enactment of the DRA, Health and Human Services Secretary Mike Leavitt said, states generally could not target benefits to specific groups of enrollees.

“Kentucky is leading the nation in crafting Medicaid benefit packages to the needs of its residents,” Leavitt said, when announcing that program's approval. “These changes make sense for enrollees and the very future of the Medicaid program.”

The Kentucky program, called Ky-Health Choices, will offer various benefit packages aimed at meeting the needs of groups such as children, the elderly, people with disabilities who need institutional care, and the general Medicaid population. Medicaid enrollees can choose the most appropriate benefit plan based on their needs, such as the Family Choices program to serve healthy children and Comprehensive Choices and Optimum Choices to serve individuals with complex health care needs.

The changes are intended to make Medicaid more sustainable without restricting eligibility or access to services for low-income and disabled beneficiaries. Kentucky's Medicaid deficit reached $675 million by July 1, 2005, and the new plan should save about $120 million in the first year and $1 billion over seven years, according to state officials.

Mental Health Concerns Arise

Sheila Schuster, Ph.D., executive director of the Kentucky Mental Health Coalition, said Medicaid participants with mental illness will be most impacted by the institution of medication copayments. She noted that the copayments of up to $3 are significantly less than the $15 copayments state officials initially proposed and allowed by DRA.

“If a copay is a barrier, then people don't get the treatment they need,” Schuster said.

The program will use “Get Healthy” benefits to provide incentives to Medicaid enrollees practicing healthy behaviors, with those who follow preventive programs for one year receiving additional services. The new benefit design was implemented in May throughout the state, except in the Louisville area, where an existing Medicaid demonstration program operates.

Although some have raised concerns that the Medicaid changes are permanent, Schuster said the new system may increase the state's ability to improve the plan as needed because it includes a shorter federal review process and does not lock the program changes in place for five to 10 years.

The Medicaid redesign approach also has allowed significant regional flexibility in the delivery of mental health services in the state, which should improve service delivery. Additionally, the new Medicaid approach does not require the budget neutrality of the traditional waiver process, which would have necessitated major cuts, Schuster said.

“Those spending caps scared us to death,” Schuster said.

Local mental health advocates were able to win exemptions to the program's limit of four prescriptions a month and the limit of three name-brand drugs for serious mental illness.

Overall, the changes were not as negative for those with mental illness as the changes and cuts made in some states in recent months, she said.

West Virginia Changes Less Clear

West Virginia's Medicaid redesign includes a choice of two benefit packages—a basic plan based on the current Medicaid service package and an enhanced plan that includes benefits not traditionally offered under Medicaid.

To enroll in the “advanced benefit package,” enrollees must sign an agreement with the state saying that they will comply with all recommended medical treatment and “wellness behaviors.” Enrollees who chose not to join the enhanced plan and those who no longer want to continue in it will receive the standard Medicaid benefit package.

About one-fourth of West Virginia's 1.8 million residents rely on Medicaid, which cost the state and federal government $2.3 billion in 2005.

“Medicaid enrollees in West Virginia will now become part of an emerging trend in health care that empowers patients to make educated, consumer-driven decisions related to their own treatment,” said Mark McClellan, M.D., Ph.D., administrator of CMS, when the redesigned program was approved.

A major change from the current Medicaid system will, however, limit access for most adults to chemical dependency and mental health services to those who choose the enhanced package, access to which is based on compliance factors such as taking medication as directed and keeping all medical appointments.

“Do we really want to penalize a low-income person who misses an appointment because they don't have a car?” asked Kathleen Stoll, director of Health Policy at Families USA, a national advocacy group.

The compliance issue also concerned Andy Schneider, senior adviser at the Center on Budget and Policy Priorities, because of the difficulty for many with mental illness to comply with treatment regimens “under the best of circumstances.”

“The consequences of not complying with this agreement are to not get the services you need to be able to comply with it,” he said.

The enhanced package includes limited chemical dependency and mental health services for up to 30 inpatient days and 20 outpatient visits annually, as well as unlimited prescriptions.

The standard package includes no such care and limits prescriptions to four per month.

Schneider said he is concerned that the Medicaid redesign did not use a traditional pilot-project approach to assess its impact, such as its first-ever decision to make treatment for mental illness contingent on compliance with a member agreement.

West Virginia plans to offer the new benefit choices in three counties initially and then expand it statewide. The state plans to assess both medical outcomes and compliance with the member agreement at the end of the first year by tracking four indicators, including the number who received screenings as directed by their health care provider.

Future changes to the state plans may come more quickly and with less opportunity for public input, Stoll said, as some West Virginia patient advocates found when they were unable to see a copy of the proposed changes before they were approved.

An overview of the Kentucky Medicaid redesign is posted at<www.chfs.ky.gov/dms/kyhealthchoices.htm>. HHS information on the West Virginia plan is posted at<www.hhs.gov/news/press/2006pres/20060503.html>.▪