October 24, 2002
MENTAL HEALTH SERVICES AND MEDICAID
By: Robin Cohen, Senior Analyst
Saul Spigel, Chief Analyst
You asked for a description of Connecticut's mental health services system for adults and the role Medicaid plays in it.
This report describes generally Medicaid coverage provided to people receiving mental health services on a fee-for-service basis. (It focuses on outpatient services, because your constituent's letter refers to clinic rates. ) Some adults (HUSKY A parents) receive their Medicaid from managed care organizations, which subcontract for mental health services. Detailed information (such as coverage limits and fees) about this latter group is not presently available.
Approximately 135,000 Connecticut adults may have serious mental illness. Connecticut's system of care for such adults is a mix of public and private services. Since the 1980s, the system has emphasized community-based, rather than institutional, care and rehabilitation and support for people in recovery. The system includes state-and privately operated psychiatric hospitals; 15 state-operated or -funded mental health authorities that provide a broad range of treatment and rehabilitation services; private physicians, clinics, and inpatient services; and community clinics.
The system is financed by a blend of private and public funds. Private funding includes insurance, out-of-pocket co-payments by people with insurance, and direct payments by self-insured people. Public funding comes from state General Fund appropriations to Department of Mental Health and Addiction Services (DMHAS) and the Correction and Judicial departments, federal block grants, Medicare, and Medicaid.
The Department of Social Services (DSS) is the state's Medicaid administering agency. By federal law, it must cover mental health services provided in a number of clinical settings, such as private offices, community clinics, and general hospitals. DSS reimburses certain clinicians (e. g. , psychiatrists in private offices) directly for their services, while it pays others indirectly (e. g. , clinics). It covers inpatient treatment in general hospitals, but Federal law prohibits Medicaid from paying for inpatient services to certain adults in psychiatric hospitals or for treatment in some residential treatment facilities.
Anecdotal information suggests that Connecticut Medicaid rates are typically less than half of what is charged in the open market. But we were unable to find provider cost information or private commercial reimbursement rates for comparative purposes.
Historically, public funding for mental health services, including Medicaid, has been fragmented, in part because two or more state agencies have managed services. But under a new partnership, DMHAS will assume primary responsibility for the clinical management of adult Medicaid fee-for-service recipients, as well as adults enrolled in the HUSKY program. Through this partnership, the state hopes to maximize federal Medicaid revenues as it shifts certain costs from the General Fund to Medicaid, which offers a 50% federal match. It is not clear whether the partnership will result in higher rates for providers.
OVERVIEW OF CONNECTICUT'S ADULT MENTAL HEALTH SYSTEM
The Governor's Blue Ribbon Commission on Mental Health recently studied the state's mental health system for children and adults. Its July 2000 report contains an overview of the system and a discussion of systemic problems, which we briefly summarize here.
National prevalence studies suggest that 135,000 Connecticut adults may have a serious mental illness. They need continuity of care and an array of rehabilitative and supportive services.
According to the Blue Ribbon Commission, Connecticut's mental health care continuum for adults includes a mix of public and private providers:
· DMHAS-operated in-patient psychiatric hospitals in Middletown (Connecticut Valley Hospital) and Newington (Cedarcrest) and two smaller in-patient units
· 15 DMHAS-operated or -funded local mental health authorities that provide a broad range of services including outpatient, residential, emergency crisis, case management, vocational, psychosocial rehabilitation groups, and other specialized programs
· The Department of Correction
· The Judicial Department's Court Supported Services Division
· Two private psychiatric hospitals
· Inpatient and outpatient psychiatric care in private general hospitals
· Private mental health practitioners
· Community outpatient clinics (operated by federally qualified Health Centers, health maintenance organizations, and primary care physicians
· The Veteran's Administration, including beds in the West Haven VA Hospital, outpatient services in Newington and West Haven, and counseling in five regional veterans' centers
· Religious organizations' pastoral counseling
· Volunteer-run peer support and self-help groups
The public mental health system, led by DMHAS, serves the poorest and most disabled of Connecticut residents with serious mental illness. The number of people it serves rose to 37,041 in FY 1998-99 from 30,728 in FY 1995-96, a 21% increase in three years. Over 12% of these clients (4,300 in 2000) have co-occurring disorders, that is they are diagnosed with both a psychiatric illness and substance abuse. And, as many as a third of homeless adults may have a psychiatric disability.
DMHAS administers public services through a statewide network of local mental health authorities. DHMAS directly operates six of these while nine are private, nonprofit organizations. The authorities' role is to coordinate the efforts of local service providers in their regions.
When all but one state in-patient psychiatric hospital closed in the 1980s, public sector care shifted from institutional to community-based treatments. Institutional services focused on inpatient, outpatient, and residential treatment. Community care emphasizes early intervention, clinical treatment, and rehabilitation services near an individual's home. But funding, especially Medicaid (see below) and private insurance reimbursements, has not kept pace with service costs. This, the commission asserts, has eroded the number of private practitioners and hospitals providing treatment services to the adult population.
Mental health services in Connecticut, as in the nation, have two basic sources of funding, private and public. Private funding includes insurance, out-of-pocket co-payments by people with insurance, and direct payments by self-insured people. Public funding comes from state General Fund appropriations to DMHAS and the Correction and Judicial departments, Medicaid, Medicare, and federal block grants. This multiplicity of funding sources, the commission stated, contributes to administrative complexity and inefficiency at all levels of the system.
From a financing perspective, the shift from institutional to community-based care requires funding a broader range of services, including primary health care, housing, transportation, and employment. Failing to provide enough funding for these basic supports, the commission stated, results in gridlock for the entire system as people are left too long in emergency rooms and inpatient facilities or discharged to inappropriate settings like homeless shelters because appropriate services are not available in the community. And, if too little is spent on treatment, it said, many people do not have access to care or receive inadequate care and may end up in shelters, prisons, or emergency rooms.
But according to the commission, Connecticut's funding for such care during the 1990s failed to grow at the same rate as the client population, and local mental health authorities, particularly the nonprofits, were forced to focus on crisis management rather than early intervention and comprehensive services to promote recovery. As a result care for people with the most serious disorders was often shifted to other public institutions- homeless shelters, prisons, and nursing homes (the latter public in the sense that Medicaid pays for the care of indigent residents). A survey of homeless shelters found that 723 residents came directly, or had been recently discharged from, psychiatric hospitals or mental health or substance abuse treatment centers during a six-month period in 1999. As of 2000, approximately 12% of Connecticut inmates had a mental illness and about 2,300 people with mental illness were living in nursing homes.
DMHAS received $ 257 million in General Fund appropriations and federal funds in FY 1995-96, according the commission. It is budgeted to receive $ 465 million in FY 2002-03, an increase of $ 208 million (81%) in seven years. This money pays for inpatient and outpatient treatment, case management, supportive housing, and court diversion services. Much of the increase in funding can be attributed to programs for new groups that have been added to DMHAS' client populations. These include State Administered General Assistance clients with mental health needs, clients with acquired or traumatic brain injuries, youths transitioning from DCF services, and prisoners with mental health needs who are released to the community. Excluding these new populations and adjusting for inflation, the DMHAS budget grew by just 0. 5% between FY 1995-96 and FY 1998-99, the commission stated.
The commission did not address private financing, but many observers have maintained that the shift from "fee for service" health insurance to managed care has significantly affected the mental health community. Until 1999, insurers were not required to cover mental illness in the same way they covered physical illnesses. Consequently, many limited the types of services they covered (e. g. , the maximum number of inpatient days) or the amounts they would pay for services (e. g. , the annual and lifetime limits). But PA 99-284 now requires insurers to treat mental illnesses and substance abuse disorders just as they treat physical illness. This is known as mental health "parity. "
MEDICAID FINANCING OF MENTAL HEALTH SERVICES FOR ADULTS
Allowable Providers-Whom States Must Allow into The Medicaid System
Adult Medicaid recipients can receive mental health services from a number of providers who are reimbursed by DSS, the state's Medicaid administrator. Federal law requires state Medicaid programs to offer inpatient and outpatient hospital services, both of which could include the provision of mental health therapy. Likewise, Medicaid must pay for physician services, which would include care provided by a psychiatrist.
Medicaid will not pay for any care received in an institution for mental diseases (IMD) when the person receiving the care is between the ages of 22 and 64. This so-called "IMD exclusion" dates back to the 1960s when the federal government said it was willing to pay for community mental health treatment but did not want to shoulder the enormous costs of inpatient psychiatric care. This precludes coverage for treatment in freestanding psychiatric hospitals and any residential facility with more than 16 beds. But mental health treatment provided in a general hospital is reimbursable, and states must offer this benefit to anyone who is a Medicaid beneficiary.
States have the option of providing a number of additional Medicaid services, some of which benefit people with mental illness. In Connecticut, for example, Medicaid pays for psychologists and clinic services for adults in need of mental health treatment. (But PA 02-07, JSS directs DSS to reduce its optional services expenditures; psychologists could potentially no longer be eligible for Medicaid reimbursement under this legislation. ) It also pays for inpatient hospitalization in IMDs for people age 65 and older and under age 22.
Allowable Outpatient Service Settings and Coverage Limits
For the fee-for-service population, DSS pays for services provided in clinics, outpatient hospital settings, and the private offices of psychiatrists, psychologists, and psychiatric advanced practice registered nurses. The latter three professions are Medicaid-enrolled providers and can thus bill Medicaid directly for services rendered. Services provided by certain allied health professionals (e. g. , social workers and marriage and family therapists) working in private practices can also receive Medicaid reimbursement provided they work under a licensed physician's practice.
The general rule for Medicaid coverage is that the services must be "medically necessary. " Although there is no per se limit on the amount of visits someone may make to a provider, outpatient visits are generally limited to 13 times in 90 days (about once weekly), with prior authorization required for any additional visits. And certain services (e. g. , partial hospitalization) require prior authorization from DSS.
DSS also pays for services provided in mental health clinics. In these settings, a variety of providers, such as licensed social workers and marriage and family therapists, can provide the service. These individuals must be working under the supervision of a physician, but the physician need not be present when the other practitioners provide the treatment. The physician must also sign off on a treatment plan.
Finally, DSS will pay for outpatient mental health services provided in the state's general and psychiatric hospitals.
Medicaid Reimbursements For Outpatient Services
Medicaid pays for adult mental health services on both a fee-for-service (for aged, blind, and disabled adults) basis and as part of the capitated rate it pays to managed care organizations for adults enrolled in the Medicaid Managed Care program (i. e. , HUSKY A for adult caretaker relatives. ) The fee-for-service rates are based on a fee schedule that DSS establishes. Table 1 provides a sampling of mental health services and the fees DSS pays for each in both the clinic and private office setting. According to DSS's Dr. Paul Piccione, physicians providing these same services receive, on average, an additional 10%. In private settings, the allied health professionals described above (e. g. , social workers) receive a flat hourly fee of $ 34. 60 or $ 7. 94 per person per group session.
Table 1: Medicaid Payments for Mental Health Services
Psychiatric Diagnostic Interview Examination/90801
$ 56. 30
$ 60. 96
$ 64. 49
Individual Psychotherapy, Insight Oriented, Behavior Modifying and/or Supportive, in an office or outpatient facility, approximately 45-50 minutes face to face/90806
Group psychotherapy (other than of a multiple-family group)/90853
(1) This is not an official DSS rate. We arrived at this figure by taking the mean of the two other provider types and multiplying it by 110%.
Although we did not have any comparable Connecticut-specific fees against which we could compare the Medicaid rates, anecdotal evidence suggests that these rates are often less than half of what commercial insurers pay or providers charge for the same services.
Connecticut Behavioral Health Partnership
The state is preparing to embark on a new partnership in which DMHAS will take over the clinical management of adult Medicaid fee-for-service recipients as well as adult caretaker relatives enrolled in the
HUSKY program who receive services from managed care providers. The state hopes that through a so-called "recovery management" program, it will be able to tap into Medicaid funds for services that have been paid previously with state funds. It intends to do this by taking advantage of the federal law's rehabilitation option.
Under this option, states can offer "medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of this practice under state law, for maximum reduction of physician or mental disability and restoration of the recipient to his best possible functional level" (42 CFR § 440. 130).
Using this option, states have the opportunity to support mental health programs designed to help people with serious and persistent mental illness attain sustained recovery and lead stable, independent lives in the community, while simultaneously reducing the reliance on acute care services in institutional settings. (Currently, only children can access this option in the state. )
Indeed, according to the Partnership's report, one of the more significant advantages of the rehabilitation option is greater flexibility in the types of settings where mental health services can be provided. The report gives the example of clinic services, which currently must be delivered in clinicians' offices and other facility-based locations. Under the option, clients could receive care in their own homes or other community-based settings.
To learn more about the partnership's plans and the rehabilitation option, go to www. CTBHP. state. ct. us