Psychiatr News September 16, 2005
Volume 40, Number 18, page 17
© 2005 American Psychiatric Association
Solutions to Medicaid Crisis Could Penalize Mentally Ill
Rich Daly
APA is among the advocacy groups that are calling on Congress to proceed
with caution on proposals to reduce Medicaid funding.
As federal legislators near a self-imposed time limit to reduce the
Medicaid budget by $10 billion over the next five years, little consensus has
emerged over where to cut the program.
Different approaches to the task have been advocated by House and Senate
leaders and the Bush administration. The most recent recommendations, offered
last month by the president's Medicaid Commission, included several that would
have an enormous impact on beneficiaries with severe mental illness. Among its
recommendations with regard to prescription drugs were the adoption of higher
copayments, the use of prior authorization, and therapeutic substitution.
The Medicaid Commission was created earlier this year as part of the
federal government's efforts to control future Medicaid spending. Its members
were appointed by Department of Health and Human Services Secretary Michael
Leavitt. The commission's recommendations, many based on suggestions from the
National Governors Association (Psychiatric News, July 15), will be
forwarded to Congress as part of the Medicaid budget process this fall.
APA and 15 other national mental health advocacy organizations that belong
to the Campaign for Mental Health Reform (CMHR) are urging restraint among
congressional leaders considering the Medicaid cuts.
Among the wide variety of cuts under consideration, the CMHR is greatly
concerned about Bush administration proposals to reduce costs by narrowing the
definitions of rehabilitation services and targeted case management (TCM)
services qualifying for Medicaid reimbursement. CMHR is also lobbying against
a proposal to lower the reimbursement rate for TCM.
"Rehabilitation services and TCM are core elements of our public
mental health system," said Charles Konigsberg, executive director of
CMHR, in a letter sent August 23 to Sen. Gordon Smith (R-Ore.).
"Rehabilitation services enable states to provide a range of
comprehensive community-based services to people with mental illness in a
coordinated and effective manner."
Many states use TCM services to increase Medicaid beneficiaries' access to
non-Medicaid services, including food stamps, energy assistance, emergency
housing, and legal services.
Deep federal funding cuts could cause many people with serious mental
illnesses to lose access to life-saving health care, said Konigsberg.
The 40-year-old Medicaid program pays over half of the care delivered
through local community mental health centers, and it helps fund much of the
use of psychotropic medication, according to the National Governors
Association (NGA). Medicaid will soon account for two-thirds of all public
mental health care spending.
Even as Medicaid takes on a greater share of public mental health spending,
it is also likely to consume an ever-increasing portion of state budgets.
Although the program is funded jointly by the federal and state governments,
Medicaid accounts for an average of 22 percent of each state's budget and is
the single largest expenditure item for states, according to the NGA.
The commission offered other cost-saving proposals that also concern APA,
including use of drug formularies and increased beneficiary copayments.
Formularies may limit access to drugs that may have higher costs, while
increased copays transfer more of the cost of care from the state to the
patient.
The time and effort to move patients with severe and persistent mental
illness from one medication to another is considerable, even in the most
successful "transfers," said Lizbet Boroughs, deputy director of
APA's Department of Government Relations. When the transfer to another
medication is unsuccessful, patients may deteriorate or experience other acute
problems, which could lead to greater medical expenses.
"So if [states] save $150 a year on this patient, is it worth it when
you look at the risks of $8,000 in hospitalization?" Boroughs said.
States have wide latitude under the current system to decide whether to
exempt psychotropic drugs from cost-control measures limiting medication
access. While most states have exempted psychotropic drugs, others have used
their authority aggressively.
Most of the proposals to cut the Medicaid budget would continue to let the
states decide whether to include psychotropic drugs in their cost-control
efforts. Other groups involved in the debate argue that Medicaid's current
cost-sharing rules, with a maximum copayment of $3 per drug, do not encourage
cost-effective utilization.
"States should be able to increase copays on nonpreferred drugs
beyond nominal amounts when a preferred drug is available, to encourage
beneficiaries to fill the least-costly effective prescription for
treatment," said Raymond Scheppach, NGA executive director, in testimony
presented to the Medicaid Commission at its August 17 hearing. "Such
copays must be enforceable to be meaningful."
One of APA's concerns about increased copayments focuses on low-income
families who need medical care. Even small increases in copayments add up
quickly when more than one child in the same family requires multiple visits
to health care professionals, which can lead families to delay medical
treatment.
"Problems get bigger when families delay going to the doctor,"
Boroughs said.
She said the results of increased Medicaid copayments were seen in a
July/August study of the Oregon Medicaid program's adoption of wide-ranging
benefit reductions and increased cost-sharing requirements for many of its
members beginning in 2003. The study, published in the journal Health
Affairs, found that within months of Oregon's making these changes, 44
percent of the beneficiaries who reported leaving the program did so because
of the increased premiums and copays.
Another area of concern is that legislators might consider cutting services
under the optional Medicaid benefits that states can offer their residents.
One such service is the home- and community-based waiver that allows the
redirection of Medicaid monies from funding hospitalization of children with
mental health problems to outpatient treatment in the child's community.
"For these mandatory beneficiaries, most of the mental illness
treatment and support services they receive are deemed `optional,'" said
Andrew Sperling, director of legislative advocacy at the National Alliance for
the Mentally Ill (NAMI), about coverage of prescription drugs, intensive case
management, and assertive community treatment. "While federal policy may
deem these services to be optional, NAMI can assure you that for these
disabled and vulnerable Medicaid recipients, medication and intensive case
management are not optional for their most basic health care needs."
Other approaches under consideration for tightening Medicaid's belt are
stricter controls on asset transfers by which families may transfer wealth
from an individual so the individual may qualify for Medicaid, reducing state
responsibility for recipients who qualify for both Medicare and Medicaid,
allowing states to implement waivers without approval from the Department of
Health and Human Services, and cutting states' ability to reap higher federal
reimbursements through intergovernmental transfers.
The Medicaid Commission will continue work on another set of
recommendations to ensure the long-term sustainability of Medicaid, due to HHS
Secretary Leavitt by the end of 2006. These recommendations will address
projected escalation in the program's costs as demographic pressures from the
retirement of the babyboom generation pose an even-greater threat to Medicaid
than its current fiscal woes, according to commissioners. Considerations
expected to be included in the long-term review are ways to expand coverage to
more Americans while remaining fiscally responsible, provide long-term care to
those who need it, and improve quality of care, choice, and beneficiary
satisfaction.
The options considered by the Medicaid Commission are posted at
<www.cms.hhs.gov/faca/mc/summary_of_options081705.pdf>.
The NGA's report, "Medicaid in 2005: Principles and Proposals for
Reform," is posted at
<www.nga.org/Files/pdf/0502MEDICAID.pdf>.
The Oregon Medicaid study is posted at
<www.ocpp.org/fedbudget/healthaffORcostsharing.pdf>.
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