Cuts to mental health could have unintended consequences
Cuts to mental health could have unintended consequences
Due to the American Recovery and Reinvestment Act of 2009 (ARRA), which required Medicaid programs to maintain eligibility standards as they were in June 2008 in order to receive enhanced Federal Medical Assistance Percentage (FMAP) funding, Medicaid mental health services typically were not cut. However, this was far from the case for non-Medicaid mental health services, which were severely cut in many states. In addition, a troubling question remains for Medicaid: What will happen when the stimulus funds lapse?
"Certainly, the stimulus money helped to prevent really deep cuts in Medicaid. But no one knows at this point what will fill the gaps after the funds lapse," says Michael Fitzpatrick, executive director of the National Alliance on Mental Illness (NAMI) in Arlington, VA. "So for 2011 and 2012, we are very concerned. We expect revenue shortfalls in the states to fall behind any economic recovery. We anticipate because of the recession and the lingering high unemployment that there will continue to be a fair amount of pressure on Medicaid budgets. State revenues continue to be challenged."
A recent analysis by NAMI reported that 11 states already have made cuts to mental health services of between 10% and 33% for FY 2010. "We've been watching this very closely, and there are some states we are still tracking. The cuts may be coming, but the state legislatures haven't passed budgets yet," reports Mr. Fitzpatrick.
In the process of researching for NAMI's March 2009 "Grading the States: A Report on America's Health Care System for Serious Mental Illness," Mr. Fitzpatrick says "what we found out there, frankly, was a fragmented system that already had limited capacity. This is absolutely a very fragile system that no one believes is ideal. Even in the states that have traditionally funded the system and planned well, there are huge gaps. Our fear is that going forward, in this bad economy, we have a Medicaid 'fix,' which is not permanent." Since the fall of 2008, Mr. Fitzpatrick says there has been a marked increase in crisis calls, more dependence on emergency departments, and a rising suicide rate.
Interestingly, in NAMI's first "Grading the States" report in 2006, a number of states reported plans to fund more crisis workers and inpatient units. "But a lot of those plans have gone out the window," says Mr. Fitzpatrick. "People are trying to hang on to the services they already have, particularly those funded by Medicaid. But if you are not funded by Medicaid, those services may not exist anymore. So, there is a shift to ERs, homeless shelters, and the like. Waiting lists continue to grow, and a lot of people are not going to be able to find services."
Since the 2009 Grading the States report, many states have made significant cuts to mental health services. "Even in the states that were doing well and had a working relationship between the governor's office, the advocates, the provider community, and the legislature, the economy and the strain on the Medicaid system is very bad," says Mr. Fitzpatrick.
Sarah Steverman, director of state advocacy for Mental Health America in Alexandria, VA, says ARRA's provision to temporarily increase Medicaid's FMAP was helpful in maintaining some funding in states and preserving services, but this hasn't been able to completely prevent states from making cuts to mental health services. "State mental health agencies are taking huge cuts in budgets this year," she says. "And we are hearing from our affiliates in the field that state budget cuts are leading to cuts in services for those on Medicaid. Budget shortfalls appear to be the primary reason for the cuts to services."
State mental health agencies are being forced to cut back on administrative costs, as well as services. "As states are reducing the number of inpatient beds, which are obviously more expensive than outpatient services, the money is not being reallocated to community services, but instead, is being used to offset the budget deficit." says Ms. Steverman. "Due to the budget crises, we are hearing that states are not reinvesting in community services and prevention, despite the accepted notion that such investments will reduce costs down the line."
Additionally, increased unemployment has led to an increased number of uninsured and Medicaid-eligible individuals. This places a greater burden on states to provide mental health services, just as they are being forced to make cuts.
Ms. Steverman notes that the Medicaid regulations limiting funding for case management services, outpatient hospital and clinic services, and school-based administrative and transportation services were rescinded in June 2009. "This avoided further cuts to services that are especially vital for individuals on Medicaid with mental health conditions," she says.
Many services in the mental health system are not fundable under Medicaid, and are therefore paid for with general fund tax money. "And that is where states are looking for cuts, with anything that isn't matched by federal money and is funded by state tax money," says Mr. Fitzpatrick.
While the stimulus money moderated cuts to mental health services on the Medicaid side, the non-Medicaid mental health services are a completely different story. These have been severely cut in a number of states.
"Since Medicaid pays for as much as 60% of all the mental health services in some states, those services paid out of general fund money are particularly vulnerable," says Mr. Fitzpatrick. "So, what you saw in a lot of states were hiring freezes, staff cuts, reduced funds to community services, and hospital units being cut. The capacity begins to shrink."
In turn, this results in a cost shift to other sectors that still have services available. In some cases, this may mean state Medicaid programs. "You are also seeing states looking closely at their formularies at the medications they will make available without conditions. They may never have considered restrictions before. But because of the economy, this is being looked at very seriously," says Mr. Fitzpatrick.
While cuts in Medicaid mental health services typically haven't occurred due to the stimulus requirements, there are indirect impacts on the program, says Jeffrey A. Buck, PhD, chief of the Survey, Analysis, and Financing branch of the Center for Mental Health Services in Rockville, MD. In some cases, cutting non-Medicaid mental health services could increase demand for Medicaid mental health services.
"People can move around and get services from different places," says Dr. Buck. "If we cut something here, does that simply mean it will push up expenses someplace else? If what they are cutting is for people who aren't eligible for Medicaid, it wouldn't affect Medicaid at all. But in the case when you cut a non-Medicaid service for a Medicaid- eligible person, or even if you cut a Medicaid mental health service, people might just utilize providers that haven't been cut, like emergency rooms or physicians."
Regardless of the stimulus requirements, quick cuts to mental health services are unlikely for Medicaid programs. "In Medicaid, if you want to eliminate a service or an eligibility group that you don't have to have, you have to get a state plan amendment. You can't just arbitrarily say, 'We're going to stop covering this group and not pay for it all.' That requires you to get federal approval, and that doesn't happen very quickly," says Dr. Buck. "The only thing you can really do in the short term is reduce payment rates. Or you can make minor changes, such as requiring prior approval for services."
Cuts to mental health services, says Mr. Fitzpatrick, are "systemwide. Virtually everything you can think of that would make up a mental health system for children and adults is being cut across the board. Anything covered by non-Medicaid money is threatened. And when the stimulus money that moderated the cuts runs out, what will fill that gap?"
The already-fragmented system is "being chipped away at, because of the recession," says Mr. Fitzpatrick. "That means that people will fall out of the system or never enter in the first place. If you look at how the mental health system is structured, there may be seven or eight services a person needs to recover. If three of those services are not available and two are drastically reduced, what tends to be left are some very basic services. The risk is that those people then use more expensive services."
Contact Mr. Buck at (240) 276-1757 or [email protected], Mr. Fitzpatrick at (703) 524-7600 or [email protected], and Ms. Steverman at (703) 797-2594 or [email protected].
Due to the American Recovery and Reinvestment Act of 2009 (ARRA), which required Medicaid programs to maintain eligibility standards as they were in June 2008 in order to receive enhanced Federal Medical Assistance Percentage (FMAP) funding, Medicaid mental health services typically were not cut. However, this was far from the case for non-Medicaid mental health services, which were severely cut in many states. In addition, a troubling question remains for Medicaid: What will happen when the stimulus funds lapse?Subscribe Now for Access
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