A federal demonstration program providing Medicaid pay for residential mental health services in 11 states ended abruptly in April, leaving patients and providers in the lurch.
Since the creation of Medicaid 50 years ago, the program has excluded payment for institutions of mental disease (IMDs), a classification that includes most residential treatment facilities for mental health and substance use disorders with more than 16 beds.
The Affordable Care Act authorized $75 million over three years for the Medicaid Emergency Psychiatric Demonstration. The aim of the initiative, administered by the CMS Innovation Center, was to test whether Medicaid could get higher quality care at a lower overall cost by reimbursing private psychiatric hospitals for emergency psychiatric care.
In all, 11 states and the District of Columbia participated in the program, which kicked off in July 2012 and was supposed to end December 2015. However, state officials notified participating hospitals in April that the program was over because the funding was exhausted early.
“Suddenly the funds just stopped, and we might not even get paid for some of the services we've already provided,” said Dr. Azfar Malik, CEO of CenterPointe Hospital, a psychiatric facility in St. Charles, Mo.
Providers suspect the money ran out because millions more people enrolled in Medicaid beginning in 2014, when many states expanded eligibility under the Affordable Care Act. A CMS spokeswoman declined to comment on why the demonstration ended early.
The CMS has no plans to extend the demonstration, the spokeswoman added. “The success of the demonstration will be determined when an evaluation is completed,” she said. A final evaluation report to the agency and Capitol Hill is not due until September 2016.
The IMD exclusion has meant a tumultuous care experience for Medicaid beneficiaries suffering from mental illness, said Mark Covall, president of the National Association of Psychiatric Health Systems. Patients endure long stays in emergency departments and are transferred around from one general acute hospital to another, sometimes far from their homes, because of bed shortages.
If no beds are available at an acute-care hospital, patients are referred to a stand-alone psychiatric facility. Under the Emergency Medical Treatment and Labor Act (EMTALA), those facilities can't deny admission even though they won't be paid due to the IMD exclusion. As a result, providers say, these patients are often discharged early and get lower quality care.
The trade group for psychiatric facilities is lobbying Congress to pass a bill that would extend the demonstration through September 2016 so that Medicaid would continue to pay for the services until lawmakers can review the results. The bill, Improving Access to Emergency Psychiatric Care Act, was introduced in February by Sen. Ben Cardin (D-Md.), along with Sens. Pat Toomey (R-Pa.) and Susan Collins (R-Maine). There has been no movement on the bill since it was introduced in February.
Covall said he and the bill's co-sponsors are concerned because there are not enough beds in general hospitals in some of these states to care for the patients who have benefited from the demonstration.
An initial evaluation of the demonstration released by the CMS in 2013 found that the vast majority of beneficiaries eligible for the demonstration had suicidal thoughts or actions. Sixty percent were admitted with diagnoses of depressive disorders, bipolar disorders or other mood disorders, and 33% were admitted with diagnoses of schizophrenia or other psychotic disorders. The Obama administration, meanwhile, plans to test another strategy to address Medicaid's IMD exclusion. Earlier this month, the CMS proposed that Medicaid managed-care plans be allowed to pay the facilities for short-term stays.
While some psychiatric facilities have praised the proposal, others were disappointed that would be limited to stays lasting 15 or fewer days in a month.
“Some of the individuals are profoundly ill and the 15-day limit could pose a significant challenge in terms of being able to care for these people,” said Dr. Lawrence Price, president of Butler Hospital in Providence, R.I. There was no such limitation for the demonstration, he added.
Also, the policy applies only for facilities that are part of Medicaid managed-care networks.
Tuerk Schlesinger, CEO of AltaPointe Health Systems in Mobile. Ala, had two psychiatric facilities participating in the CMS demonstration, but Alabama's Medicaid program doesn't contract with managed-care plans. AltaPointe's facilities would not be ineligible to get reimbursement for treating Medicaid beneficiaries under the proposed policy.
Schlesinger said the situation is troubling because there are very few beds for severely mentally ill people in his state and continuing to care for these patients without pay would be financially catastrophic for the company.
“We wouldn't be able to stay open very long,” Schlesinger said.