You asked (1) whether the Medicaid Rehabilitation Option for mental health group homes has been evaluated, (2) how funds have been disbursed, and (3) whether the Department of Mental Health and Addiction Services (DMHAS) added any positions to implement the new Medicaid option.

SUMMARY

The Medicaid Rehabilitation Option (MRO) was implemented in January 2005. It is jointly operated by DMHAS and the Department of Social Services (DSS). DMHAS administers the program's clinical components and provides grants to group homes for non-Medicaid clients; DSS pays group homes for services to Medicaid clients. Currently, Medicaid payments are based on interim rates. The departments are working jointly to establish permanent rates.

The departments have just begun to address program evaluation. Their first step is a recently signed a memorandum of understanding permitting them to share client and provider information and cost data. Within the next few months they will begin formulating research questions that will look at changes in the (1) population served, (2) services offered, and (3) costs and spending and client outcomes.

Funding for group homes has increased by about $ 900,000 since the Medicaid option began. In FY 04, DMHAS grants paid group homes $ 8. 2 million. In FY 06 homes received $ 9. 1 million in combined grants and Medicaid reimbursements. But some homes saw their income decline under the new system. DMHAS officials believe this is due to their having fewer than expected Medicaid clients. DMHAS is currently determining whether to reimburse these homes for their net loss over the first two years of the MRO's operation.

DMHAS officials state that the department has not added any new positions to implement the MRO, but it did reassign a few existing staff to handle these responsibilities.

EVALUATION

The departments have just started addressing program evaluation. They recently (11/17/06) signed a memorandum of understanding that will permit them to share client and provider information and cost data, which is the first step toward implementing an evaluation that compares services and funding before and after the option began.

The MRO represents a significant policy and procedural transformation, according to Susan Graham, the DMHAS program manager. It changed the types of services purchased, the flow of funds, and the expected client outcomes. Graham expects to begin working with DSS early next year to formulate research questions appropriate to these changes. She provided a sample of the areas an evaluation might address.

1. Have the populations DMHAS-funded facilities serve changed since the MRO was implemented in terms of (a) Medicaid and non-Medicaid populations, (b) demographics, (c) level of functioning and diagnosis?

2. How do offered services differ in terms of (a) national models for assertive community treatment, (2) proportion of Medicaid-reimbursable services, and (3) quantity of services that are not Medicaid reimbursable?

3. What is the change in costs in terms of (a) overall costs, (b) DMHAS spending, (c) federal Medicaid reimbursement?

4. How have client outcomes changed in terms of (a) improvements in functioning, (b) employment, (c) reduced hospitalizations and mobile crisis and emergency room visits?

FUNDING

The MRO changed the way the state pays group homes for their services. Before the option was implemented on January 1, 2005, annual DMHAS grants paid group homes prospectively based on their prior funding history. The MRO instituted a retrospective payment system in which DSS reimburses homes at a set rate for specific services they provide.

DMHAS instituted several policies to ease group homes transition to the new funding schemes. These were:

1. providing one-time “provider readiness” grants that homes could use to purchase rehabilitation-related curricula and pay licensed clinicians for up to six months;

2. continuing to make full grant contract payments through March 31, 2005 even though group homes began billing Medicaid on January 1, 2005;

3. postponing until FY 06 recoupment of April 1 through June 30, 2005 grant payments to reflect Medicaid reimbursements homes had received; and

4. adjusting contract funds at the end of FY 06 in order to “keep providers whole” for the first two years of the rehab option.

The guarantee to keep providers whole arose from the reduction DMHAS made to homes' grants to account for their anticipated Medicaid reimbursements. DMHAS did this by multiplying each home's beds by an $ 1,800 per month interim rate and an expected 83% Medicaid penetration rate. Homes that did not maintain this level of Medicaid clients throughout the year lost income relative to their previous grant income; homes that exceeded the 83% penetration rate realized more income. DMHAS anticipates paying homes that lost money after it and DSS set new MRO rates.

Table 1 shows the payments group homes received in FYs O4 to 06.

Table 1: DMHAS Mental Health Group Home Funding, FY 04 to 06

* Net of Recoupment for April to June Medicaid Claims

Source: DMHAS

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